A new capital gains tax on stock investments has come into effect, but insiders say it won’t change much on the market.
Under the Personal Income Tax Law effective January 1, stock investors must pay either 0.1 percent of the value of each transaction or 20 percent on their net profit for the year.
Investors choosing to pay 20 percent on the year’s net profit still have to pay 0.1 percent on each sale first, with any excess tax paid to be refunded at the end of the year.
Brokerages said most of their clients opted to pay 0.1 percent on every sale, fearing that tax refund procedures in the second option could be complicated.
Huong, an investor at Dai Viet Securities Corporation, said paying tax on net profit was a better choice, especially as the market is currently depressed. However, she still decided to go with the 0.1 percent option for its simplicity.
Le Anh Thi, Deputy General Director of Ho Chi Minh City-based Au Viet Securities Corporation, told local news website VnExpress the new tax would have only a marginal and short-term impact on investor sentiment.
Analysts said the 0.1 percent tax on each transaction was small and would not stop investors from trading.
Nguyen Anh Tuan, General Director of SJC Securities, said if market prospects are bright, the new capital gains tax would not worry investors. “Their biggest worries now are capital inflows to the stock market and lending policies at commercial banks,” he said.
“The capital gains tax on stock investors could be a problem, but it’s a minor one, similar to an increase in trading fees,” said Quach Manh Hao, Deputy General Director of Thang Long Securities in Hanoi, as quoted by Vietnam Economic Times on Tuesday.
Investors said they expected the new tax to motivate brokerages to cut trading fees.