Do I have to pay personal income tax in Vietnam when I sell securities at a loss?
I recently had a stop loss on a stock that I bought 7 months ago. My lawyer asked me, do I have to pay personal income tax in Vietnam when I sell securities at a loss? Is it possible to pay personal income tax with shares? Looking forward to the lawyer’s answer, I sincerely thank you!
Thank you for sending your question to Lawyer X. In the article below, we will answer your questions. Hope this article brings many useful things to readers.
Legal grounds
- Law on personal income tax 2007
- Tax Administration Law 2019
What is personal income tax?
The law does not provide a specific definition of what is personal income tax? But we can understand “Personal income tax” is a tax amount that income earners must deduct part of their salary or other revenue into the state budget after deductions have been calculated. To pay tax, individuals register for personal tax identification numbers to make declarations and payments; tax refund, or for personal business.
In there; Tax is understood as a compulsory payment to the state budget of an organization; family; household business; individuals according to the provisions of tax laws (Clause 1, Article 3 of the Law on Tax Administration 2019).
What is the role of personal income tax?
Increase revenue for the State budget
Due to the liberalization of the commercial economy; Therefore, import and export taxes gradually decrease over time. Therefore; Personal income tax is becoming more and more important and is the main source of revenue for the State budget.
The economy is growing; the level of people’s will is improved; social self-consciousness is also more common; The per capita income of each individual is increasing day by day. And the fulfillment of obligations to society; Increasing revenue for the state budget is the duty and responsibility of each person.
Practicing social justice
In many countries, there are regulations on tax exemption and reduction for individuals carrying a social burden. In our country; PIT is built on the principle of fairness and ability to pay taxes. PIT is not levied on low-income individuals; enough to support himself and his family at the necessary level.
Therefore, it is necessary to regulate personal income tax for people with high incomes; ensure the implementation of social justice policy. The payment of PIT also contributes to reasonably reducing the disparity between population classes.
What income is subject to personal income tax?
According to Article 3 of the Law on Personal Income Tax 2007 (amended and supplemented 2012); The subject must pay PIT when having the following incomes:
Business income.
Income from business does not include income of business individuals with turnover of 100 million VND/year or less.
Incomes from salaries and wages, including:
- Salary, wages and other items of salary and wage nature
- Allowances and subsidies, except for the following: allowances and incentives for people with meritorious services; defense and security allowances; toxic and dangerous allowances; attraction allowance, regional allowance as prescribed by law…
Income from capital investment, including: Loan interest; stock dividends…
Income from capital transfer, including: Income from the transfer of capital in economic organizations; stock transfer…
Income from real estate transfer.
Incomes from winning prizes, including: Lottery winnings; Win prizes in the form of promotions…
Incomes from copyright, including: From the transfer or transfer of the right to use objects of intellectual property rights; Technology transfer.
Franchise income.
Income from inheritance.
Income from receiving gifts.
Do I have to pay personal income tax when I sell securities at a loss?
In Article 3 of the Law on Personal Income Tax 2007 there are provisions on taxable income as follows:
- Income from capital investment, including:
a) Loan interest;
b) Share dividends;
c) Income from capital investment in other forms, except income from government bond interest.
- Income from capital transfer, including:
a) Incomes from the transfer of capital shares in economic organizations;
b) Income from securities transfer;
c) Income from capital transfer in other forms.
According to current regulations, in case you transfer securities, you must pay personal income tax. Regardless of whether you sell at a loss or a profit.
Can I pay personal income tax by shares?
In Article 6 of the Law on Personal Income Tax 2007 there are provisions on converting taxable income into Vietnam Dong as follows:
- Taxable income received in foreign currency must be converted into Vietnam Dong at the average exchange rate on the interbank foreign currency market announced by the State Bank of Vietnam at the time of income generation. .
- Taxable income received not in cash must be converted into Vietnam Dong at the market price of such products or services or products or services of the same or equivalent type at the time of income generation.
Accordingly, the case of taxable income received not in cash must be converted into Vietnam Dong. Therefore, personal income tax cannot be paid in shares but must be converted into Vietnamese currency.
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Related articles:
- Procedures for personal income tax finalization in Vietnam
- Vietnamese law on corporate income tax
- How many securities accounts can a person open in Vietnam?
Contact LSX Lawfirm
Finally, we hope this article is useful for you to answer the question about: “Do I have to pay PIT in Vietnam when I sell securities at a loss?”. If you need any further information, please contact LSX Law firm: +84846175333 or Email: [email protected]
Frequently asked questions
According to the provisions of Clause 2, Article 8 of the Law on Personal Income Tax; Individuals eligible for tax refund include:
The paid tax amount is larger than the payable tax amount;
– Individuals who have paid tax but have taxable incomes that are not up to the level to pay tax;
Other cases as decided by competent state agencies.
According to the provisions of Article 2 of the Personal Income Tax Law 2007 amended and supplemented in 2012, the PIT payers include:
Resident individuals with taxable income arising inside and outside the Vietnamese territory, meeting the following conditions:
Being present in Vietnam for 183 days or more in a calendar year or counting for 12 consecutive months from the first day of presence in Vietnam;
Having a regular place of residence in Vietnam, including having a registered place of permanent residence or having a rented house to live in in Vietnam under a fixed-term lease.
Non-resident individuals with taxable income arising in the territory of Vietnam
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