Clarification on personal income tax on capital contribution transfer activities

In discussions with enterprises, in Official Letter No. 4082/TCT-QLN, the General Department of Taxation had affirm that the enterprise where the individual transfers their capital contribution is responsible for filing and paying the tax on behalf of the individual if the enterprise cannot prove that the individual have fulfilled their personal income tax obligations.

Specifically, the law stipulates that a resident individual who transfers capital contribution must declare taxes on each transfer, regardless of whether any income is generated. In cases where an enterprise, during the process of changing the list of capital-contributing members due to capital transfer, does not have documents proving that the individual transferring the capital has completed their personal income tax obligations, that enterprise is responsible for filing and paying the tax on behalf of the individual.

The tax obligation arises from the time the individual transfers their capital, and the organization that files and pays the tax on behalf of the individual must fully comply with the regulations on tax declaration and payment as stipulated for taxpayers.

Accordingly, enterprises with individuals transferring capital must ensure that these individuals strictly comply with tax declaration and payment obligations. Additionally, the enterprises should retain relevant documents to verify that these individuals have fulfilled their personal income tax obligations.