Remove proposal to pay tax immediately when receiving stock dividends

The Ministry of Finance will submit to competent authorities to temporarily suspend the regulation on collecting tax immediately upon receiving dividends in securities, keeping the calculation method of only collecting tax when making transactions.

Investors will not have to pay taxes immediately when receiving stock dividends - Photo: QUANG DINH

The Ministry of Finance has just announced a summary of comments on the draft amendment to Decree 126, which regulates a number of articles of the Law on Tax Administration.

Accordingly, many relevant ministries and agencies requested the drafting agency to review the proposal to pay tax immediately upon receiving dividends in securities.

Because in reality, those shares of securities are not traded immediately. When shareholders receive dividends or bonuses in shares, they need cash to pay taxes immediately at the time the company pays dividends or bonuses, while in reality there is no cash flow yet.

Regarding this content, the Ministry of Finance said that in principle, when a business makes a profit, it will pay dividends to investors.

Accordingly, distributing dividends in securities to investors and deducting personal income tax (PIT) at the time of distribution is in accordance with the provisions of current PIT law.

However, the Ministry of Finance admits that, in the context of the country focusing resources on investment in private economic development according to Resolution No. 68, while preparing for the roadmap to upgrade the stock market in the coming time, the regulation of tax deduction and declaration at the time of dividend payment or stock bonus will cause difficulties for both individuals and businesses.

For investors, they only receive "valuable papers" but no cash flow, so they cannot pay taxes immediately. For businesses, if they have to deduct and pay on their behalf, they are forced to spend a large amount of money, directly affecting cash flow and business operations.

Therefore, the Ministry of Finance maintains the plan to pay tax on dividends and bonuses in securities at the time of transfer, instead of paying immediately upon receipt as proposed a few months ago.

Previously, at the end of June, the Ministry of Finance had issued a draft to amend and supplement a number of articles of Decree 126 and widely solicited opinions.

According to statistics, in the period from 2016 to the end of 2024, individuals receiving dividends in securities and existing shareholders receiving bonuses in securities received a total of 34.84 billion shares.

If all of these shares were transferred at the par value of VND10,000/share, the personal income tax payable (tax rate of 5%) would be estimated at VND17,420 billion. However, in reality, the tax declared from this source was only VND1,318 billion, equivalent to nearly 8% of the estimated amount.

In the same period of 2016 - 2024, the total personal income tax declared from capital investment activities reached 51,965 billion VND, of which tax from dividends and stock bonuses accounted for only 2.54%, or 1,318 billion VND.

Many agencies, organizations and associations such as the Vietnam Federation of Commerce and Industry (VCCI), the Vietnam Association of Financial Investors (VAFI)... have proposed to keep the current regulations.

The reason is that the nature of paying dividends in shares is different from that of cash dividends, in that the time of distribution and the time when the investor actually owns the shares do not coincide, due to the need for more time to complete additional listing procedures.

According to the assessment of associations and businesses, if tax is required to be paid immediately upon stock split, it will reduce investment motivation and put great pressure on cash flow and capital mobilization ability of businesses.

The Ministry of Finance said that in the context of the Government focusing on promoting the private economic sector and preparing to upgrade the stock market, it will not amend the provisions of Decree 126 for the time being. However, the agency will continue to research to perfect the policy, ensuring consistency between the Law on Personal Income Tax and the Law on Tax Administration.

It is expected that the new Personal Income Tax Law and the amended Tax Administration Law will be submitted to the National Assembly for consideration at the upcoming October session.

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Le Nhat Quang

Source: https://tuoitre.vn/bo-de-xuat-nop-thue-ngay-khi-nhan-co-tuc-bang-chung-khoan-20251007201242808.htm