Công văn 7283/BTC-TCT

To: The Tax Department of Binh Duong province

The Ministry of Finance has received Official Letter No. 2366/CT-TNCN of Binh Duong province’s Tax Department, inquiring about the PIT obligation of founders of one-member limited liability companies for incomes from capital investment activities after their companies pay business income tax (BIT). Regarding this matter, the Ministry of Finance guides as follows:

According to provisions of Point 3.3, Clause 3, Section II, Part A of the Finance Ministry’s Circular No. 84/2008/TT-BTC of September 30, 2008, guiding the implementation of a number of articles of the PIT Law and guiding the implementation of the Government’s Decree No. 100/2008/ND-CP of September 8, 2008, detailing a number of articles of the PIT Law, profits received by individuals for their contribution of capital to limited liability companies are PIT-liable incomes.

Under the above provisions, for profits earned by a one-member limited liability company founded by an individual, after paying BIT under provisions of the BIT Law, performing other financial obligations under law provisions and making deductions for setting up funds prescribed in the company’s charter, the remaining incomes of capital contributors are regarded as taxable ones and subject to tax payment declaration as follows:

- If capital contributors withdraw their profits out of the company, they shall declare and pay PIT at the rate of 5% for profits earned from capital investment right after the profit withdrawal.

- If capital contributors use their profits to increase the company’s charter capital, they will be eligible for the PIT rate of 5% for capital investment activities when they sell the company or the company’s operations is terminated.

The Ministry of Finance notifies such to provincial-level Tax Departments for information and implementation guidance.-