Công văn 4252TCT/DTNN official Dispatch No. 4252 TCT/DTNN of December 22, 2004, on personal income tax on incomes earned from stock put option

THE MINISTRY OF FINANCE THE GENERAL DEPARTMENT OF TAXATION’S -------	SOCIALIST REPUBLIC OF VIET NAM Independence - Freedom – Happiness ---------
No. 4252 TCT/DTNN	Hanoi, December 22, 2004

OFFICIAL LETTER

ON PERSONAL INCOME TAX ON INCOMES EARNED FROM STOCK PUT OPTION

To: Provincial/municipal Tax Departments

The General Department of Taxation has received official letters from a number of enterprises, requesting for instruction on personal income tax (PIT) on incomes earned from non-cash put stock option under employee stock ownership plans (ESOPs). Concerning this issue, the General Department of Taxation gives the following opinion:

Pursuant to the Government's Decree No. 147/2004/ND-CP of July 23, 2004, detailing the implementation of the Ordinance on Income Tax on High-Income Earners and the Finance Ministry's Circular No. 81/2004/TT-BTC of August 13, 2004, guiding the implementation of the above-said Decree, in cases where foreign companies grant their employees at Vietnam-based companies non-cash stock put option on foreign securities markets, incomes earned from the exercise of stock options shall be included in taxable incomes of these employees.

On the day of exercising their stock put option under the plans, if employees buy a number of shares for which a put option is granted and such shares are sold at the market price, incomes earned from stock options shall be the net difference between the value of shares calculated at the market price at the time of sale and the value of shares calculated at the price determined under companies’ ESOPs, after deducting expenses related to the transactions. Such incomes are qualified as regular incomes and shall be included in personal income tax-liable incomes of the month when they are generated and settled by the end of the year corresponding to the time (month/year) of exercising stock put option as specified under ESOPs and generating incomes payable to employees of Vietnam-based companies, whether or not such incomes are remitted into Vietnam.

The aforesaid guidance shall be applicable to incomes earned from stock put option on foreign securities markets as from July 1, 2004, but not to incomes earned from stock put option on foreign securities before July 1, 2004, which are subject to taxation scheme stipulated in relevant taxation documents .

Provincial/municipal Tax Departments are requested to report any problems arising in the course of implementation to the General Department of Taxation for timely settlement.

FOR THE GENERAL DIRECTOR OF TAXATION DEPUTY GENERAL DIRECTOR Pham Van Huyen