Regulations on donation of capital contribution or share
Donation of shares contributed capital is a right of a shareholder of a shareholding company, owner of a single-member company limited, and member of a multi-member company limited. This right is recognized in 2014 Enterprise Law, specially as follows
– Article 50.6 of the 2014 Enterprise Law stipulates that members of a multi-member company limited have the right to “dispose of their contributed capital by transferring, donating or otherwise giving away a part of the whole of such amounts in accordance with law and company’s charter”.
– Article 77 of the 2014 Enterprise Law provides that “in case owner of company transfers or donates a part of its contributed capital to other organizations or individuals…”; and
– Article 126.5 of the 2014 Enterprise Law stipulates that “shareholders have the right to donate a part or all of their shares in the company to other people; use their shares for debt repayment. In this case, the donee or recipient of the debt repayment with shares shall become a shareholder of the company”.
– According to Article 54.5 of the 2014 Enterprise Law, for a multi-member company limited, if the recipient of member’s contributed capital is its spouse, parent, child or relatives up to the third rank of inheritance, he (she) shall naturally become a member of the company. If the recipient is another person, he (she) shall only become a member of the company upon approval of Members’ Council
– If a shareholding company has lack of the minimum number of members because a shareholder donates his entire shares to another organization or individual or a single-member company limited has more members who are donated a part of contributed capital from its owner, it shall carry out procedures for conversion of the form of company in accordance with the number of members and register the change of business registration contents at business registration agency within 10 days from the date of completion of the donation
Under Article 2.10 of Circular No. 111/2013/TT-BTC, income from the donation of shares of shareholders of a shareholding company, contributed capital of owner of a single-member company limited, members of a multi-member company limited is the income subject to personal income tax. The personal income tax is calculated according to the following basis:
|Payable tax||=||Taxable income||x||10%|
In the above calculation, taxable income is calculated as follows
- For the donation of shares, taxable income is the value of the number of these shares at the time of giving if it is over VND 10 million.
- For the donation of contributed capital, taxable income is the value of the contributed capital determined on the basis of the bookkeeping value of the company at the time of giving.