Securities investors feel encouraged these days when hearing that the ongoing National Assembly’s session would discuss the proposal by the government--on exempting personal income tax PIT on the incomes from securities investments.


The government has suggested exempting PIT imposed on the dividends and the incomes from the investments in businesses’ stocks, and on the incomes obtained from securities assignment deals.
Nguyen Hoang Hai, Secretary General of the Vietnam Association of Financial Investors VAFI, has applauded the decision to temporarily exempt tax on dividends and income from share transfer deals.
“This is a necessary solution to stabilize the stock market in the current difficult conditions,” Hai said
Analysts have also said that if the tax exemption is ratified by the National Assembly, this would help encourage people to pour their capital into the stock market, which would help improve the market liquidity.
The stock market is now in the most ever difficult period in its history, when the VN Index has dropped by 20 percent in comparison with late 2010. The share prices have decreased by 30-60 percent so far this year. As a result, most of the securities investors have incurred losses, and many of them have fled the market.
However, the problem is that even when taking loss, securities investors still have to pay PIT. In principle, there are two options for securities investors to pay a tax.
They have to either pay 20 percent of the profits (The margin of the sale and purchase prices) or 0.1 percent of the sale prices. If they choose the former method of payment, they would only have to pay tax when they make profits. However, the majority of investors decided to pay tax under the latter method due to the complicated procedures they have to follow when defining the purchase and sale prices, which serves the calculation of profits.
The analysts have also commented that it is necessary to exempt tax on dividends in order to create the fairness with bank depositors (Bank depositors now do not have to pay PIT on the incomes from deposit interests).
According to Hai from VAFI, in other regional countries, nearly 100 percent of idle capital is deposited at banks or injected in the stock market. Meanwhile, in Vietnam, the idle capital has been put into many different investment channels: gold, dollar, or real estate sector. VAFI said only 30 percent of idle money in Vietnam has been put into bank deposits.
According to Hai, in order to drive the idle public money into the banking system and the stock market, the State should apply many different flexible policies. For example, it should apply the measures to restrict the trade of bullion gold. People would be still allowed to possess gold, and when they need money, they have to sell gold to the State Bank at international prices at the sale moments.
Besides, Hai thinks that it is also necessary to restrict the real estate trade, though he stressed that this should be carried out in accordance with a roadmap. The restriction should be applied only when the liquidity in the real estate market becomes better, and the market warms up.
Some experts have proposed to exempt securities trade tax on institutional and individual investors. They believe that when the stock market stabilizes and develops, enterprises will find it easier to mobilize capital via the stock market, thus helping ease the burden of providing credit on the banking system.