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New capital gains tax explained
The Personal Income Tax Law, which came into effect on January 1, is being applied to share trading in unlisted companies.
The government last year announced it would start collecting tax on share trades to raise revenue. Details of the new tax were only revealed in the final days of last year.
Thanh Nien caught up with Tran Thi Le Nga, a senior official from the Ho Chi Minh City Department of Taxation, to find out how the new capital gains tax regulations apply to unlisted share transactions.
Which document should traders rely on to confirm their unlisted share transactions?
According to the Ministry of Finance’s latest guideline, brokerages will have to rely on purchase contracts to confirm unlisted share transactions.
But if there is no contract or the share prices on the contract are lower than the book value at the time the transactions take place, brokerages will have to rely on the book value to value the tax.
We have sought advice from higher levels on how the tax will be applied if unlisted shares are sold for less than the face value of VND10,000 (US$0.57), but basically the capital gains tax for unlisted stock transactions will rely on purchase contracts.
What is the procedure for paying capital gains tax on unlisted stock transactions?
Investors who trade unlisted stocks also have to pay either 0.1 percent of each sale or 20 percent on their net profit for the year.
For those who opt for the first payment method, the unlisted firms will have to collect the tax from investors and send it to the tax department if they don’t have any broker managing their individual shareholder’s transactions.
Otherwise, the brokerage will be responsible for collecting the tax from investors and sending it to the tax department.
Ownership certificates will be transferred to the buyers after the seller pays the tax on the transaction.
Investors who want to pay 20 percent on their net profit for the year will have to pay their tax directly to the tax department.
Will investors have to pay tax on cash dividend payouts announced last year but paid out this year? (In Vietnam, joint stock companies usually pay dividends every six months.)
According to the regulations which set out the guidelines for the Personal Income Tax Law, investors have to pay tax on profits which are generated after the law takes effect.
Thanh Xuan
thanhnien
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