VietNamNet Bridge – The Ministry of
Finance is going to submit to the National Assembly the plan to reduce the
personal income tax (PIT) imposed on the earnings from securities investments.

Taxation does not please securities
investors

The
currently applied five percent tax imposed on dividends clearly is not
applauded by securities investors. Especially, the overly high tax rate has
discouraged investors in the context of the lackluster market, and prompted
investors to run away from the market.

Analysts
have also pointed out that the source of revenue from taxing securities
investors, just counts as a small proportion in the total state’s budget
collection, especially when the liquidity on the stock market remains weak.

The problem
is that while securities investors have to pay tax on dividends, depositors do
not have to pay tax on the interests they get from dong, gold or foreign
currency deposits. This has made securities investors think that there exists a
discriminatory treatment among investors.

Huynh Anh
Tuan, General Director of SJC Securities Company, said that he does not think
the PIT reduction on dividends would help heat up the frozen stock market, but
he still thinks that it is necessary to adjust the tax rate in order to ensure
the equality for securities investors.

“Necessary
policies need to be applied to remove the discriminatory treatment,” he said.

Sharing the
same view, Pham Linh, General Director of International Securities Company,
said that the amendments of unreasonable policies, including the adjustment of
the dividend PIT will help restore investor confidence, while confidence proves
to be the most important thing in the development of the stock market in Vietnam.

New way of taxation proposed

Besides the
PIT on dividends, securities investors also have to pay PIT when making
transactions in the stock market, even when they take loss.

In fact,
under the PIT Law, securities investors can choose one of the two methods of
calculating tax.

With the
first method, securities investors have to pay 0.1 percent of the sale prices
right after every transaction. Meanwhile, with the second method, they have to
pay 25 percent on the profits they make from securities investments during one
year (the tax finalization is carried out at the end of year).

However, it
is really very difficult to apply the second method (taxing 25 percent on the
total profits), because it is unfeasible to define the total sale prices and
total purchase prices of investors. A lot of investors do not keep documents
about the transactions to show to tax officers.

Meanwhile,
it is nearly impossible to define the sale and the purchase prices, if
securities investors make transactions on the OTC market.

Therefore,
most investors accept to pay tax in accordance with the first method. However,
the problem is that in this case, even the investors who take loss with their
transactions, still have to pay tax. According to Tien phong, though there are
no official statistics, it is clear that the number of profitable investors is
very modest, because the market remains very gloomy.

In order to
settle the problem, the Vietnam Association of Financial Investors (VAFI) has
suggested a new taxation method, under which the securities transfer tax will
be calculated one day after securities make transactions, while securities
companies will collect the tax immediately after securities make profits.

However,
experts have pointed out that the suggested taxation method still also cannot
define the business profits in the most exact way.

Meanwhile,
as for the transactions on OTC market, VAFI believes that the current method
should still be applied.

Source: Tien phong