In which the tax on incomes from capital investment shall be declared and paid by the individual (the investor), the company shall not withhold and declare this tax.
With regard incomes from transfer of shares, they shall be subject to personal income tax (PIT) in terms of incomes from securities transfer (point b Clause 4 Article 2 of Circular No. 111/2013/TT-BTC).
If the transferred shares belong to a public company at a Stock Exchange, the individual is not required to directly declare and pay tax at tax authority. Instead, the securities company or the commercial bank where the person opens his/her depository account/the asset management company entrusted by the individual to administer the investment portfolio shall declare tax (Clause 6 Article 21 of Circular No. 92/2015/TT-BTC.
Official Letter No. 167/TCT-DNL - Regarding costs of capital transfer paid via a third party ( 10-Jan-2018) Based on Clause 2 Article 14 of Circular No. 78/2014/TT-BTC, the General Department of Taxation assumes that in case an enterprise incurs charges for consulting service for capital transfer paid via a third party, if the enterprise can provide legitimate documents (their details are in line with contracts signed with, invoices issued by the third party) proving that such charges are directly related to the activity of capital transfer, they shall be included in deductible expenses upon calculation of enterprise income tax
The calculation of payable EIT on the income from capital transfer shall be carried out according to Article 14 of Circular No. 78/2014/TT-BTC.
In which, the purchase price of the transferred capital is the value of the contributed capital accumulated to the time of capital transfer on the basis of accounting books, documents. However, it should note that the value of the capital contributed on behalf of another investor shall not be included in the purchase price upon the transfer.
- If the transferred capital is the capital contributed to establish enterprise, the purchase price is the value of the contributed capital accumulated to the time of transfer based on the accounting books, documents and certified by the contributing parties or cooperation parties, or based on the audit results from an independent audit company with regard to wholly foreign-capitalized enterprises.
- If the transferred capital is repurchased, the purchase price is the capital value at the purchase time. The purchase price is determined based on the contract on repurchasing contributed capital and the payment receipts.
Accordingly, in the case a shareholder wishes to withdraw stakes from a company, if value of the withdrawn capital is increased in comparison with the initial capital contribution, he/she shall be subject to tax on capital investment.
The withholding rate is 0.1% of transfer price (Article 20 of Circular No. 111/2013/TT-BTC).
If the company wishes to declare and pay tax on behalf of the capital transferor, it shall use the tax return form No. 04/CNV-TNCN issued together with Circular No. 92/2015/TT-BTC. In the PIT declaration dossier, it is required to additionally write the phrase “khai thay” (declare on behalf of) before “taxpayer”, and the declarant has to add his/her signature, full name, and the company’s seal.
According to Article 3 of the Law on value added tax No. 13/2008/QH12, VATable subjects in Vietnam are goods and services used for production, trading or consumption in Vietnam.
Accordingly, in the case the Vietnamese enterprise transfers a project on investment in a trade centre outside Vietnam to a foreign enterprise, such project is not the VATable subject in Vietnam. As the result, incomes from the transfer of the project, on which VAT must not be declared and paid in Vietnam.
However, according to Clause 22 Article 7 of Circular No. 78/2014/TT-BTC, the incomes from the transfer of project outside Vietnam are still subject to enterprise income tax (EIT) in Vietnam and must be applied the normal tax rate of 22% (from January 1st, 2016, it is 20%), instead of enjoying preferential tax rate.
For arisen expenses related to the project, if the conditions provided in Article 6 of Circular No. 78/2014/TT-BTC (which has been amended at Article 4 of Circular No. 96/2015/TT-BTC) are met, they shall be determined deductible expenses upon calculation of EIT on the activity of project transfer.
Where the incomes from the project transfer have incurred EIT (or a tax similar in nature to EIT) outside Vietnam, upon calculation of EIT payable in Vietnam, the tax amount already paid abroad shall be deducted (Clause 22 Article 7 of Circular No. 78/2014/TT-BTC).
Official Letter No. 664/TCT-CS - Regarding tax on the transfer of shares ( 1-Mar-2017) According to point 1 of Official letter No. 12501/BTC-CST dated September 20th, 2010, with regard to the activity of transfer of shares in a joint stock company, if this company is a public company, the transfer of shares in such company is considered to be “securities transfer”. In contrast, if this company does not become a public company, the transfer of shares is regarded as “capital transfer”. read more
Accordingly, in the case shareholders who are foreign organizations operating not under the Law on Enterprises, the Investment Law earn incomes from transfer of shares in a joint stock company but such company is not a public company, this activity of transfer of shares is considered to be “capital transfer”; they shall pay enterprise income tax (EIT) on the capital transfer according to Article 14 of Circular No. 78/2014/TT-BTC.