When Do You Have to Pay Personal Income Tax on Stock Dividends? Which Types of Income Are Subject to Personal Income Tax?

1. Legal Basis for Income from Capital Investment

According to Clause 3, Article 2 of Circular No. 111/2013/TT-BTC, as amended by Clause 6, Article 11 of Circular No. 92/2015/TT-BTC, income from capital investment refers to the income individuals receive from the following sources:

• Interest from lending to organizations, enterprises, households, or individual businesses (excluding interest from bank deposits or loans to credit institutions).

• Dividends received from capital contribution through share purchases.

• Profits earned from contributing capital to limited liability companies, partnerships, cooperatives, joint ventures, or investment funds.

• The increased value of capital contribution upon dissolution, merger, division, or withdrawal of capital from an enterprise.

• Interest income from bonds, treasury bills, or other valuable papers issued by domestic organizations.

• Other forms of capital investment income, including contributions made in the form of tangible assets, goodwill, land use rights, inventions, or patents.

• Income from stock dividends or profits recorded as capital increases.

2. Do Stock Dividends Incur Personal Income Tax?

According to Vietnamese tax law, stock dividends are classified as income from capital investment, which means they are subject to personal income tax.

However, individuals do not have to declare or pay tax at the time they receive the stock dividends. Instead, the tax obligation arises only when the individual sells (transfers) the shares.

👉 In summary:

• When receiving stock dividends → no PIT payment required yet.

• When selling those shares → PIT must be declared and paid as income from securities transfer.

3. Basis for Calculating Personal Income Tax on Investment Income

Under Article 10 of Circular No. 111/2013/TT-BTC, PIT on investment income is determined as follows:

✅ 3.1. Taxable income

Taxable income is the total income subject to tax as defined in Clause 3, Article 2 of the same Circular.

✅ 3.2. Tax rate

The flat tax rate is 5%.

✅ 3.3. Timing of taxable income determination

• For general capital investment income → the time when the organization or individual pays income.

• For increased capital value → when the enterprise is dissolved, merged, divided, or when capital is withdrawn.

• For profits recorded as capital increases → when capital is transferred or withdrawn.

• For stock dividends → when the individual transfers (sells) the shares.

✅ 3.4. Tax calculation formula

Personal Income Tax Payable = Taxable Income × 5%

4. Types of Income Subject to Personal Income Tax

According to Clause 1, Article 2 of Circular No. 111/2013/TT-BTC, income subject to PIT includes:

🔹 4.1. Income from business activities

Income generated from production or business activities in all sectors, such as:

• Manufacturing, construction, transportation, trade, and catering services;

• Leasing houses, land use rights, or other assets;

• Practicing independently under a professional license or certificate;

• Agricultural, forestry, or fishery business not eligible for tax exemption.

🔹 4.2. Income from capital investment

Including interest, dividends, capital gains, bond interest, and stock dividends as mentioned above.

🔹 4.3. Other taxable incomes

Such as capital transfers, real estate transfers, royalties, franchising income, winnings, inheritances, and gifts, as stipulated in the Law on Personal Income Tax and Decree No. 65/2013/NĐ-CP.

5. Conclusion

In conclusion:

• Receiving stock dividends is considered income from capital investment, which falls under the scope of personal income tax.

• However, the tax obligation arises only when the shares are sold, not at the time of receipt.

• The applicable PIT rate is 5% according to the flat-rate schedule.

Understanding these provisions helps investors declare their taxes correctly and on time, ensuring compliance with Vietnamese tax laws and avoiding potential penalties.

🔍 Suggested SEO Keywords:

• personal income tax on stock dividends in Vietnam

• when to pay tax on stock dividends

• PIT on capital investment income

• Vietnamese tax on dividends in shares

• 5% PIT on investment income