When investing in the stock market or contributing capital to enterprises, in addition to earning profits from dividends and capital appreciation, shareholders are also subject to an important obligation to the State, namely the declaration and payment of personal income tax. Regulations on taxation relating to shareholders’ income are relatively complex, encompassing various tax rates and calculation methods applicable to different types of income. The following article by NPLaw provides a comprehensive and detailed overview of the tax obligations that shareholders should clearly understand in order to ensure legal compliance, optimize benefits, and avoid unnecessary legal risks.

I. Current situation of taxation relating to shareholders’ income

In the context of a rapidly developing economy, capital investment in joint stock companies has become increasingly common, resulting in greater attention being paid to shareholders’ tax obligations. In practice, however, not all investors have a thorough understanding of the legal regulations governing taxation of their income.

One of the most common challenges lies in distinguishing and correctly applying the appropriate taxes to different sources of income. Shareholders generally derive income from two primary sources: Dividends distributed and gains from the transfer of shares. Each type of income is subject to a distinct tax rate and calculation method.

A lack of information or misinterpretation of regulations often leads to incorrect declarations or late payments, resulting in avoidable administrative sanctions. Accordingly, it is essential for shareholders to equip themselves with accurate and comprehensive legal knowledge regarding taxation of their income.

II. Legal regulations governing taxation relating to shareholders’ income

1. Taxes applicable to shareholders’ income

Income earned by shareholders from ownership of shares in a joint stock company primarily comprises two categories, each subject to a distinct type of personal income tax (PIT):

  • Dividend income (income from capital investment): It refers to after-tax profits distributed by the company to shareholders. Pursuant to Point b, Clause 3, Article 2 of Circular No. 111/2013/TT-BTC, dividend income is classified as income from capital investment and is subject to taxation.
  • Income from transfer of shares (income from capital transfer): When a shareholder transfers shares to another party, the resulting income is classified as income from securities transfer (in the case of shares of public companies) or income from capital transfer (in the case of shares in unlisted joint stock companies).

2. Guidelines for calculating taxes relating to shareholders’ income

- Dividend income

Dividends received by shareholders are subject to PIT at a rate of 5% of the total dividend amount. The calculation formula prescribed under Article 10 of Circular No. 111/2013/TT-BTC is as follows:

PIT payable = Taxable income × 5%

Where taxable income is the total dividend amount received.

Example: Ms. A is a shareholder of Joint Stock Company X. In 2025, she receives cash dividends of 100,000,000 VND. The PIT payable is: 100,000,000 VND × 5% = 5,000,000 VND.

The dividend-paying company is responsible for withholding the 5% tax prior to payment and remitting it to the state budget on behalf of the shareholder.

- Income from transfer of shares

Tax calculation for share transfer transactions varies depending on the type of company:

  • For shares in public companies (listed shares): A tax rate of 0.1% applies to the transfer price per transaction. It is stipulated in Point b, Clause 2, Article 11 of Circular No. 111/2013/TT-BTC (as amended by Article 16 of Circular No. 92/2015/TT-BTC).
  • PIT payable = Transfer price per transaction × 0.1%

It is important to note that the tax is calculated on the gross sale value, regardless of whether the transaction results in a gain or loss.

Example: Mr. B sells 10,000 shares of Company Y on the stock exchange at 25,000 VND per share. The total transaction value is 250,000,000 VND. The PIT payable is: 250,000,000 VND × 0.1% = 250,000 VND.

  • For shares in unlisted joint stock companies: A tax rate of 20% applies to taxable income. Taxable income is determined as the transfer price minus the purchase price and reasonable related expenses.
  • PIT payable = (Transfer price – Purchase price – Reasonable expenses) × 20%

3. Do shareholders incur tax liabilities when receiving stock dividends and how are such taxes determined?

It is a matter of significant concern for many shareholders. Under current regulations, no PIT is payable at the time of receipt of stock dividends.

Tax liability arises only when the shareholder transfers the shares received as dividends. At that point, the shareholder is required to declare and pay two types of taxes:

PIT on capital investment (5%): Calculated based on the par value of the shares received as dividends that are subsequently transferred.

  • PIT on capital investment = Number of dividend shares sold × Par value × 5%
  • PIT on securities transfer (0.1%): Calculated based on the actual transfer price of such shares.
  • PIT on securities transfer = Number of shares sold × Actual selling price × 0.1%

Pursuant to Point d, Clause 5, Article 7 of Decree No. 126/2020/ND-CP, the issuing organization (the company) is responsible for declaring and paying tax on behalf of individuals in respect of income from capital investment when such individuals transfer shares of the same type.

III. Questions regarding taxation of shareholders’ income

1. Are there any tax exemptions or reductions applicable to shareholders’ income?

Under current PIT regulations, there are no general provisions for tax exemption or reduction applicable to dividend income or income from share transfers. In principle, such income is subject to PIT in accordance with applicable laws.

However, certain exceptions exist in line with State incentive policies. For example, under Resolution No. 222/2025/QH15, specifically Point b, Clause 2, Article 19, individuals earning income from the transfer of shares or capital contributions in entities that are members of an international financial center are entitled to PIT exemption until the end of 2030.

2. When must enterprises declare and pay taxes relating to shareholders’ income?

For cash dividends: Enterprises must withhold and declare tax on a monthly or quarterly basis, in line with corporate income tax declaration periods. The deadline for monthly declarations is the 20th day of the following month; for quarterly declarations, the deadline is the last day of the first month of the subsequent quarter.

For stock dividends: Enterprises are responsible for declaring and paying tax on behalf of shareholders at the time the shareholders transfer such shares.

3. Are taxes applicable to other benefits or rewards received by shareholders besides dividends?

Any benefit received by shareholders from the company as a result of capital contribution may be regarded as income from capital investment and subject to taxation. For instance, cash bonuses paid to shareholders are treated as capital investment income and subject to a 5% tax rate. Bonuses in the form of shares are subject to similar tax treatment as stock dividends.

4. Is tax calculated based on the purchase price or selling price when shareholders transfer shares?

It depends on the type of shares:

  • For listed shares, PIT (0.1%) is calculated based on the selling price per transaction, regardless of the purchase price.
  • For shares in unlisted companies, PIT (20%) is calculated based on the difference between the selling price and the purchase price, after deducting reasonable expenses.

5. Does receiving dividends from affiliated companies lead to tax obligations?

For individual shareholders, the source of dividends does not affect tax obligations. As long as dividends are received from capital investment, such income is classified as capital investment income and subject to PIT at a rate of 5%. Regulations on avoidance of double taxation typically apply at the corporate level and not to individual shareholders receiving dividends.

IV. Legal advisory services relating to taxation of shareholders’ income

Compliance with tax regulations is the responsibility of all individuals and enterprises. However, the tax law system is subject to frequent amendments and updates, requiring in-depth understanding and continuous monitoring. Particularly for investors, misunderstanding or overlooking regulations may lead to unnecessary financial and legal risks.

At NPLaw, we are proud to have a team of experienced lawyers and consultants specializing in tax and corporate matters. We provide comprehensive legal advisory services relating to taxation of shareholders’ income, including:

  • Advising on tax regulations: Clarifying applicable tax rates, calculation methods, and declaration timelines for each type of income (cash dividends, stock dividends, share transfers).
  • Assistance with tax declaration and finalization: Guiding and supporting individual shareholders and enterprises in preparing documentation and fulfilling PIT declaration and finalization procedures accurately and on time.
  • Tax optimization: Providing lawful solutions to assist investors and enterprises in planning investment strategies and profit distribution in a tax-efficient manner.
  • Representation in dispute resolution: Acting on behalf of clients in dealings with tax authorities, providing explanations, and resolving disputes relating to tax obligations.

With dedication and professionalism, NPLaw is committed to accompanying our clients, safeguarding their lawful rights and interests, and providing peace of mind in their investment and business activities.