Ministry of Finance withdraws proposal to pay tax immediately upon receiving dividends in securities

(Dan Tri) - The Ministry of Finance maintains the plan to pay tax on dividends and bonuses in the form of securities at the time of transfer, instead of paying immediately upon receipt as previously proposed.

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

According to the Ministry, in the context that the country is focusing resources on developing the private economy according to Resolution 68, and at the same time preparing for the roadmap to upgrade the stock market, the regulation of tax deduction and declaration at the time of paying dividends or bonuses in securities 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 decided to maintain the option of paying tax on dividends and bonuses in securities at the time of transfer, instead of collecting it immediately upon receipt as proposed in June.

In a draft released in June, the Ministry of Finance proposed collecting personal income tax as soon as investors receive dividends or bonuses in the form of securities, instead of waiting until they sell. At that time, the agency said that current regulations caused many individuals, especially large shareholders, to not be taxed in time even though their assets had increased. The issuing organization would be responsible for deducting and paying taxes on behalf of the recipient.

Customers look at stock price board (Photo: Hai Long).

Many ministries, associations and relevant agencies then proposed to reconsider this proposal. The Vietnam Federation of Commerce and Industry (VCCI), the Vietnam Association of Financial Investors (VAFI)... all proposed to keep the current regulations.

The reason is that paying dividends in shares is different from paying dividends in cash: the time of announcing the dividend and the time when shareholders actually own and trade the shares do not coincide, because additional listing procedures must be completed.

According to the assessment of the business community, if it is mandatory to pay taxes immediately upon receiving shares, it will reduce investment motivation and put great pressure on cash flow as well as the ability to mobilize capital of the business. The reason is that when shareholders receive dividends in shares, they do not have cash flow yet but still have to pay taxes immediately.

Data shows that in the period 2016-2024, investors and existing shareholders received a total of 34.84 billion shares in the form of dividends and bonuses. If all of these shares were transferred at a par value of VND10,000/share, the personal income tax payable (tax rate of 5%) is estimated at about VND17,420 billion. However, in reality, the declared tax amount only reached VND1,318 billion, equivalent to nearly 8% of the estimated amount.

During the same period, total personal income tax from capital investment activities reached VND51,965 billion, of which tax from dividends and stock bonuses accounted for only 2.54% (ie VND1,318 billion).

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

Source: https://dantri.com.vn/kinh-doanh/bo-tai-chinh-rut-de-xuat-nop-thue-ngay-khi-nhan-co-tuc-bang-chung-khoan-20251008012529639.htm