In the draft amendment to Decree 126, the Ministry of Finance proposed to add regulations on deduction, declaration and payment of personal income tax at the time the individual receives dividends and bonuses on securities, instead of delaying the transfer time as at present.
According to the drafting agency, current regulations have caused the tax payment time to be extended, affecting the effectiveness of tax management and slowing down the state budget collection process. Not taxing immediately upon actual income has also caused the assets and incomes of shareholders, especially large shareholders and strategic shareholders - to increase but not be regulated in a timely manner.
Currently, dividends are being paid in many forms such as cash, stocks or increased capital contributions. For cash dividends, tax obligations are implemented immediately at the time of payment. However, dividends or bonuses in shares are only taxed when transferred, leading to many individuals not having to pay taxes for a long time due to no transactions occurring.
The Ministry of Finance stated that this poses a potential risk of tax loss and increases the monitoring burden for management agencies. Changing the tax calculation time will help increase the initiative of the budget, make the income flow from capital investment transparent and ensure fairness between forms of dividend payment.
Data from the tax sector shows that in the period of 2016-2024, the total declared personal income tax from capital investment will reach nearly VND 52,000 billion, of which tax from dividends and bonuses in shares only accounts for about VND 1,318 billion - equivalent to VND 2.54%.
At the same time, according to Vietnam Securities Depository and Depository Corporation, the total amount of shares that individuals received from dividends and bonuses was up to 34.84 billion units. If all of these shares are transferred at a face value of VND 10,000 and a tax rate of 5%, the estimated tax payable is up to VND 17,240 billion.
Thus, the actual tax paid is only 8% of the potential level. This difference is considered a direct consequence of the delay in tax payment to the transfer time, leading to tax obligations but not being recorded immediately.
International experience also shows that many countries have applied the source tax deduction mechanism for securities dividends. In Thailand, personal income tax with dividends is 10% and is deducted immediately upon payment. India also imposes a 10% tax on a dividend exceeding 5,000 Rupee, which is deducted from the source by the issuing institution.
The Ministry of Finance believes that unifying the principle of tax deduction at the time of income generation will be in line with international practices, ensuring fairness between forms of dividend distribution, while supporting tax authorities to manage more effectively.
