A reader with the email mythux@xx sent an email to the Lao Dong Newspaper’s Legal Consulting Office to ask: I am a capital contributing member of a multiple-member limited liability company and wish to transfer a part of the contributed capital to others. Is income from the transfer of contributed capital subject to personal income tax? How is personal income tax (if any) calculated in this case?

Lawyer Nguyen Thi Trang, YouMe Law Firm replied:

Clause 4, Article 2 of Circular No. 111/2013/TT-BTC amended by Article 4 of Circular 25/2018/TT-BTC provides for one of the incomes subject to personal income tax as follows:

4. Incomes from capital transfer

Incomes from capital transfer are personal income in the form of:

a) Profits from transfers of capital contributions to limited liability companies (including single-member limited liability companies), partnerships, business cooperation contracts, cooperatives, people credit funds, economic organizations, and other organizations.

b) Incomes from securities transfer include incomes from transfer of stocks, the right to buy stocks, bonds, treasury bills, fund certificates, and other securities according to the Law on Securities. Incomes from transfer of stocks by individuals in a joint-stock company are specified in the Law on Securities and the Law on Enterprises.

c) Incomes from other forms of capital transfer.

Point a Clause 1, Article 11 of Circular No. 111/2013/TT-BTC stipulates the assessable income for income from the transferring contributed capital as follows: Assessable income from the transferring contributed capital equals the transfer price minus the purchase price of the transferred capital and rational expenses related to the generation of the income from transferring capital.

Point d Clause 1, Article 11 of Circular No. 111/2013/TT-BTC stipulates the tax calculation for income from the transferring contributed capital as follows:

Personal income tax payable = Assessable income × Tax rate 20%.

Thus, income from transferring contributed capital is income subjected to personal income tax. Tax calculation from the transferring contributed capital shall comply with the provisions cited above.

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The category is made with the support of YouMe Law Firm.