The Ministry of Finance has proposed the Government raise the individual income tax imposed on capital/securities transfer to 2 percent for trades not registered to the Vietnam Securities Depository. (Photo: tinnhanhchungkhoan.vn)
Hanoi (VNA) - The Ministry of Finance hasproposed the Government raise the individual income tax imposed oncapital/securities transfer to 2 percent for trades not registered to theVietnam Securities Depository (VSD) and not made on the securities market.
The individual income tax imposed on each securities/capitaltransaction is calculated by the selling price minus the buying price andcharges that help generate the income for the individual investor.
According to Article 23 and 28 of the Law of Personal IncomeTax issued in November 2011, both resident and non-resident individuals aretaxed at 0.1 percent for each securities transaction.
Meanwhile, resident individual investors must pay a tax rateof 20 percent for each capital transaction while non-resident individualinvestors only have to pay 0.1 percent tax rate.
According to the finance ministry, it had been difficult formarket regulators to keep track of securities transactions, which were notregistered to the VSD for trading on the securities market, and charges that wererelevant to the transactions.
In many cases, individual investors falsely declared thedifference between selling and buying prices was zero, which led to taxarrears, the finance ministry said in its proposal.
In other cases, some companies that had not registered theirshares to the VSD for trading on the securities market avoid paying corporateincome taxes by transferring the securities to various individuals at thebuying-selling price difference of zero, the ministry said.
Then the individual buyers only had to bear a 0.1 percent taxrate for their income when selling the securities at higher prices, theministry added.
Thus, the ministry proposed the Government increase theindividual income tax rates on the selling price of the transfer of untradedand unregistered capital/securities to 2 percent. The 0.1 percent individualincome tax rate would be imposed only on transfer of shares that are traded andregistered to the stock exchanges.
The proposal is a part of the ministry’s overall proposal ondeveloping a draft law to amend the laws of added value tax, specialconsumption tax, corporate income tax, personal income tax, natural resourceand environment tax and import-export tax.
Brokerage firms and market analysts were not available for comment.
A number of brokerage firm representatives have raisedconcerns over the feasibility of the latest proposal. They argue that it wouldcost market regulators and tax agencies more time and effort to keep track oncapital/securities transactions to collect tax, tinnhanhchungkhoan.vn reported.
The transfer of securities is a part of the transfer ofcapital as capital transfer is the trading of ownership in limited liabilitycompanies, associated companies and economic organisations.
Meanwhile, securities transfer is the trading of ownership,shares, options, bonds, fund certificates and other securities products injoint stock companies, according to the Laws on Securities and Enterprises.
As the tax rate imposed on capital transfer is 20 timeshigher than the tax rate imposed on securities transfer, it would encourageunlisted and untraded companies to dodge the tax regulations.
They could turn to the form of a joint-stock company from theform of limited liability company. This would cause more trouble for the taxagencies collecting taxes from their transactions if the regulators fail tokeep track of the trading of securities and capital.-VNA
VNA
