Ms. Nguyen Phuong Thuy (in Hanoi) contributed capital to set up a company in Singapore, including 2 members, she and a foreign company. Now the company pays dividends. Through the receiving and answering system of enterprises’s recommendations, Ms. Thuy would like to ask,  when transferring her profits to Vietnam, what kinds of tax will she be charged?

The deductible tax amount shall not exceed the tax amount calculated by Vietnam before allowing deduction or distribution on such income.

Regarding this issue, the General Department of Taxation - Ministry of Finance has opinions as follows:

Pursuant to Circular No. 111/2013 / TT-BTC dated August 15, 2013 of the Ministry of Finance guiding the implementation of the Law on Personal Income Tax (PIT), the Law amending and supplementing a number of articles of the Law on PIT and Decree No. 65/2013 / ND-CP of the Government detailing a number of articles of the Law on PIT and the Law amending and supplementing a number of articles of the Law on PIT: Clause 3, Article 2 guiding the types of revenues taxable imports from capital investments; Article 10 provides guidance on the tax rate for income from capital investment is 5%;

Pursuant to Article 10 of the Vietnam - Singapore Double Tax Avoidance Agreement on dividends;

Pursuant to the provisions of Point a, Clause 2, Article 24 of the Vietnam-Singapore Double Taxation Avoidance Agreement on elimination of double taxation:

“a. When a resident of Vietnam has an income which, under the provisions of this Agreement, may be taxable in Singapore, Vietnam will allow that person to be deducted from the above Vietnamese tax that resident's income is an amount equivalent to the amount of tax paid in Singapore.

Where such income is dividends paid by a company which is a resident of Singapore to a resident of Vietnam that is directly or indirectly owned by a company. not less than 10% of the share capital of the first company, the deducted tax shall take into account the Singapore tax paid by that company on the dividends used to divide the dividends. However, the deductible tax amount will not exceed the tax amount calculated by Vietnam before allowing deduction or distribution on such income ”.

In case Ms. Nguyen Phuong Thuy is a resident of Vietnam participating in contributing capital to establish a company in Singapore, Ms. Thuy must pay PIT in Vietnam on her income from capital investment at the tax rate of 5%.

If Ms. Thuy has paid tax on her dividends in Singapore, Ms. Thuy will be deducted from the tax payable in Vietnam, however, the deductible tax amount must not exceed the PIT payable in Vietnam. .

If Ms. Thuy does not pay tax on her dividends in Singapore, Ms. Thuy will not be deducted from the PIT amount payable in Vietnam.