How to calculate personal income tax for capital transfer

HOW TO CALCULATE PIT FOR CAPITAL TRANSFER

OUTLINES

1. Regulations on income from capital transfer subject to PIT. 

2. How to calculate PIT from capital transfer.

3. Personal income tax declaration dossiers for capital transfer.

   The transfer of contributed capital in economic organizations and securities transfers is now crucially active, popular which has received great attention and attention from numerous of people. According to the Law on Personal Income Tax, individuals' incomes from the transfer of contributed capital and securities are subject to personal income tax. So what are those cases? How is personal income tax calculated from capital transfer regulated? The following article will analyze this content, helping readers understand the necessary information.

Types of income from capital transfer subject to personal income tax (Illustration).

1. Regulations on income from capital transfer subject to personal income tax

• According to Clause 4, Article 3 of Personal Income Tax Law 2007, incomes from capital transfer subject to personal income tax include: transfer of capital in economic organizations; securities transfer; transfer capital in other forms.
• In which, income from capital transfer in economic organizations according to Circular No. 111/2013/TT-BTC is the personal income received from the transfer of contributed capital in limited liability companies or public companies. partnerships, cooperatives, business cooperation contracts, people's credit funds, economic organizations, and other organizations.
• Income from securities transfer according to Circular No. 25/2018/TT-BTC guiding the is the personal income received from the transfer of stocks, share purchase right, bill purchase right, bond purchase right, fund certificate purchase right and other securities purchase right according to the Law on Securities; income from the transfer of shares of individuals in a joint-stock company in accordance with the Law on Enterprises and the Law on Securities.

How to calculate personal income tax from capital transfer (Illustration).

2.  How to calculate PIT from capital transfer

1. How to calculate PIT from the transfer of contributed capital in economic organizations:

• The formula for calculating personal income tax is as follows:

• Tax rate 20% x Taxable income = Payable personal income tax
• In there:

• Taxable income is calculated as follows:

• Taxable income = Transfer price – (Related costs + Purchase price)
• Accordingly, the transfer price is the amount of money that an individual receives under the contract for transferring contributed capital. In case the payment price is not written on the contract or the payment price on the contract is not consistent with the market price, the transfer price shall be indicated by the tax authority in accordance with the law on tax administration.
• The purchase price is the value of the contributed capital at the time of transfer of contributed capital, including: value of capital contributed to the establishment of the enterprise, value of capital due to acquisition, value of capital of additional contributions, value of shares capital from capital gains recorded in capital gains.
• The related costs are the actual and reasonable expenses incurred, including: expenses for carrying out necessary legal procedures for the transfer; fees and charges paid by the transferor to the state budget when carrying out transfer procedures, and other expenses directly related to the transfer of contributed capital.

• The tax rate of 20% applies to income from the transfer of contributed capital according to the Full Tax Schedule.
• The effective time of the capital transfer contract is the time of determining taxable income. Particularly for capital contribution with contributed capital, the time when individuals transfer capital and withdraw capital is determined as the time for calculating taxable income.

2. How to calculate PIT from securities transfer?

• The personal income tax is calculated as follows:
• Tax rate 0.1% x Securities transfer price each time = Personal income tax payable
• In there:

• The securities transfer price is determined according to the exercise price at the Stock Exchange for securities of a public company traded on the Stock Exchange, whereby the exercise price is determined from the order matching results. or prices formed from put-through transactions at the Stock Exchange.
• If the securities do not fall into the above case, based on the price stated in the transfer contract or the actual transfer price or the price according to the most recent financial statement of the unit having the transferable securities (based on the accounting books involving list transfer price) before the time of transfer.
• The time of determining taxable income from securities transfer is based on the time when taxpayers receive income from securities transfer for securities of public companies traded on the Stock Exchange; based on the time of transfer of ownership of securities at the Securities Depository Center, for securities of a public company, the transfer of ownership shall be carried out through the rights transfer system of the Securities Depository Center; based on the effective time of the securities transfer contract if not falling into the above two cases.

3. PIT declaration dossier for capital transfer.

• According to Point h, Clause 5, Article 7, Point g, Clause 4, Article 8 of Decree No. 126/2020/ND-CP  stipulating income from capital transfer on tax declaration dossiers which is  incurred each time, declared by individuals or organizations on behalf of individuals who directly declare tax, please prepare a tax declaration form No. 04/CNV-TNCN issued together with Circular No. 92/2015/TT-BTC; transfer of capital contribution Agreement; payment vouchers; documents related to the value of contributed capital according to accounting books; business license; identity card or citizen identification and other relevant documents.
• Individuals and organizations declare and submit tax declaration dossiers for transfer of contributed capital at the tax agency directly managing the organization having transferred capital.
• The deadline for submitting personal income tax declaration dossiers from capital transfer is: No later than the 10th day from the date of arising tax obligations (ie from the effective date of the capital transfer contract), individuals subject to personal income tax from capital transfer must submit tax declaration dossiers for each time income is generated.

• In case an organization pays tax on behalf of an individual, the time to submit a tax return is before the time of carrying out procedures for changing the list of capital contributors as prescribed. The organization shall declare on behalf of the personal income tax declaration dossier in case the organization where the individual transfers the tax declaration capital on behalf of the individual. Before the phrase "Taxpayer or Taxpayer's legal representative", the declaration organization shall write the phrase "Declare on behalf of" and at the same time the declarant signs, clearly states the full name and seal of the organization. On tax records, tax receipts still show that the taxpayer is an individual transferring capital.

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➤ What kind of capital does the company include?
➤ Where do I submit the PIT finalization file?
➤ Failure to pay personal income tax will result in a penalty..
➤ Finalization of personal income tax in Korea and FAQs. 

• The above is the content of some regulations on the current guidance on how to calculate personal income tax from capital transfer of Thinh Tri Law Firm. If you have any questions, please contact Hotline 1800 6365 for advice.