Detailed instructions on how to declare personal income tax (PIT) on transfer of shares and capital contributions: Principles, documents, submission deadline, how to make a PIT declaration.
I. Legal basis
- Circular 111/2013/TT-BTC;
- Circular 156/2013/TT-BTC;
- Circular 92/2015/TT-BTC;
- Circular 80/2021/TT-BTC.
II. How to declare personal income tax from capital contribution transfer activities
1. Principles of personal income tax declaration
➤ For resident individuals: Resident individuals transferring capital contributions must declare tax for each capital contribution transfer regardless of whether or not taxable income arises.
➤ For non-resident individuals: Non-resident individuals with income from capital contribution transfer activities in Vietnam do not have to declare tax directly to the tax authority, but the organization or individual receiving the transfer shall declare tax. In case the transferee is an individual, tax shall be declared upon each occurrence.
➤ When transferring capital contributions without a basis to determine that tax obligations have been fulfilled: Enterprises and organizations that carry out procedures to change the list of capital contributing members in the case of transferring capital contributions without documents proving that the individual transferring capital contributions has fulfilled tax obligations, the enterprise is responsible for declaring and paying taxes on behalf of that individual.
2. Personal income tax declaration
Tax declaration documents for resident individuals with income from capital transfer activities include:
- Personal income tax declaration from capital contribution transfer activities according to form No. 04/CNV-TNCN issued with Circular 80/2021/TT-BTC;
- Copy of capital transfer contract;
- Documents determining the value of capital contribution according to accounting books (certificate of capital contribution) or contract for repurchasing capital contribution in case of capital contribution transfer due to repurchase;
- Copies of invoices and documents proving expenses related to capital contribution transfer activities.
FREE DOWNLOAD:
>> Personal income tax declaration form No. 04/CNV-TNCN;
>> Contract for transfer of capital contribution.
3. Place to submit personal income tax return
Enterprises submit tax declarations to the tax authority directly managing the enterprise whose capital contribution is transferred.
4. Deadline for submitting personal income tax return
➤ In case of individuals directly declaring tax: The 10th day from the effective date of the capital contribution transfer contract.
➤ In case the enterprise declares tax on behalf of an individual: The latest time to submit the tax declaration is before the time the enterprise completes the procedure to change the list of contributing members.
5. Deadline for paying personal income tax
The deadline for paying personal income tax is the deadline on the tax payment notice of the tax authority.
6. Instructions for filing personal income tax returns
For example:
Mr. A is a capital contributor in Abc LLC with a capital contribution value of 1,800,000,000 VND. On August 10, 2022, Mr. A signed a contract to transfer his capital contribution to Ms. C with a transfer price of 2,000,000,000 VND and received 100% payment via personal account.
– The time for determining taxable income is August 10, 2022 – the effective date of the transfer contract;
– Taxable income = 2,000,000,000 VND – 1,800,000,000 VND = 200,000,000 VND;
– Personal income tax payable = 200,000,000 VND x 20% = 40,000,000 VND.
➥ Thus, Mr. A must pay personal income tax from capital transfer activities of 40,000,000 VND.
II. How to declare personal income tax from stock transfer
1. Principles of personal income tax declaration
- Individuals transferring shares declare tax each time it occurs;
- If an enterprise changes its shareholder list but does not have documents proving that the individual transferring shares has fulfilled his tax obligations, the enterprise is responsible for declaring and paying taxes on behalf of that individual.
2. Personal income tax declaration
Tax declaration documents for individuals transferring shares and declaring directly to the tax authority include:
- Personal income tax declaration from securities transfer activities according to form No. 04/CNV-TNCN issued with Circular 80/2021/TT-BTC;
- Copy of share transfer contract.
>> FREE DOWNLOAD: Share transfer contract.
3. Place to submit personal income tax return
Individuals submit tax declarations to the tax authority managing the enterprise issuing the shares that the individual transfers.
>> See more: How to register and pay taxes electronically.
4. Deadline for submitting personal income tax return
➤ In case of individuals directly declaring taxes: No later than 10 days from the effective date of the share transfer contract.
➤ In case the enterprise declares tax on behalf of an individual: The latest time to submit tax declaration documents is before the time the enterprise carries out procedures to change the shareholder list.
5. Deadline for paying personal income tax
The deadline for paying taxes incurred is the deadline for submitting tax returns.
6. Instructions for filing personal income tax returns
For example:
Mr. A is a shareholder of Abc Joint Stock Company with a share value of 100,000 shares x 10,000 VND = 1,000,000,000 VND. On August 10, 2022, Mr. A signed a contract to transfer his shares to Ms. C with a transfer price of 100,000 shares x 12,000 VND = 1,200,000,000 VND and received 100% payment via personal account.
– The time for determining taxable income is August 10, 2022 – the effective date of the transfer contract;
– Taxable income = 100,000 shares x 12,000 VND = 1,200,000,000 VND;
– Personal income tax payable = 1,200,000,000 VND x 0.1% = 1,200,000 VND.
➥ Mr. A must pay personal income tax from share transfer activities of 1,200,000 VND.
IV. Some questions about personal income tax from transfer of shares and capital contributions
1. When transferring personal capital, can an individual authorize a company to declare personal income tax because the individual does not clearly understand this tax declaration issue, or is it mandatory for the individual to declare?
When transferring capital contributions, individuals can directly declare taxes or the company where the transfer is made can declare taxes on behalf of the individual if the individual has not fulfilled tax obligations before changing the list of capital contributing members.
When declaring on behalf of another person, the company writes the phrase “Declaration on behalf of another person” before the phrase “Taxpayer or legal representative of the taxpayer” and the declarant signs, clearly states his/her full name and affixes the company seal.
2. Can personal income tax declarations from capital and share transfers be submitted online?
Individuals who self-declare can submit their application online at https://canhan.gdt.gov.vn/.
3. Is there a penalty for not submitting personal income tax declaration when transferring capital?
Failure to submit personal income tax declarations from capital transfers will be subject to penalties as prescribed in Decree 125/2020/ND-CP. The lightest penalty is a warning, the heavier penalty can be a fine from VND 2,000,000 to VND 25,000,000.