The Ministry of Finance is proposing a 20% tax on individuals' net income from stock trading, calculated as the selling price minus the purchase price and reasonable expenses. If the purchase price and expenses cannot be determined, the tax will be 0.1% of the selling price for each transaction, as per current regulations.

Nguyen Quang Huy, CEO of the Faculty of Finance and Banking at Nguyen Trai University, told VnExpress that the proposed two options for taxing stock profits are "a commendable effort towards fairness and efficiency." The current flat tax of 0.1% of the selling price is easy to implement but unfair as those who lose money still pay taxes.

Huy said a sustainably developed stock market is a pillar for reducing dependence on bank credit, mitigating systemic risks, and promoting innovation in the private sector. "Therefore, taxing stock profits fairly encourages legitimate wealth creation," he commented.

Similarly, Nguyen The Minh, Director of Individual Customer Analysis at Yuanta Securities Vietnam, believes the new tax regulation is more reasonable and aligns with international practice. "This is the method used in most major markets. The basic principle is that only income is taxed, not losses. This ensures fairness in investment," Minh said.

He argued that taxing based on profit also reflects the true nature of investment. Especially with products like derivatives, where investors don't hold tangible assets, taxing based on transaction value is inappropriate. "Investors only hold a derivative contract, not actual shares or assets. Taxing by transaction distorts the nature of investment," Minh explained.

Regarding the impact on the stock market, he believes taxing profits won't hinder market liquidity and might even increase its attractiveness. "If every transaction is taxed regardless of profit or loss, investors might hesitate and trade less. Conversely, taxing profits encourages trading, creates a more flexible capital flow, and may attract more investors, including foreign ones," he said.

Trading at Rong Viet Securities Joint Stock Company (TP HCM), 10/2024. Photo: An Khuong

Trading at Rong Viet Securities Joint Stock Company (TP HCM), 10/2024. Photo: An Khuong

However, experts consider the proposed 20% tax rate quite high. "Many countries only apply a 10-15% tax rate on stock profits. If Vietnam immediately implements this rate without a roadmap, investors will react negatively," Anh Duc analyzed.

Nguyen Anh Duc, Executive Director of Institutional Brokerage and Investment Advisory at SBB Securities (SBBS), explained that the current method of taxing 0.1% of the selling price is lower than brokerage fees at many firms and simpler to calculate. In contrast, the proposed 20% tax on profits can create a significant difference in absolute terms. For example, under the old method, an investor who buys stock for 1 billion VND and sells it for a 200 million VND profit would pay 1.2 million VND in taxes. If they sell at a 200 million VND loss, they still pay 800,000 VND. Under the new proposal, they would pay 40 million VND in taxes if they sell for a profit and nothing if they sell at a loss.

However, the number of investors facing the higher tax rate might be relatively small. Anh Duc cited statistics showing that 90% of stock market participants lose money, so many individual investors won't be negatively affected if the proposal is approved.

Another challenge, according to Anh Duc, is defining profit. For instance, if an investor lost 1 billion VND last year and gained 100 million VND this year, their account is still negative overall. "But under the new calculation, the 100 million VND profit would still be taxed this year," he pointed out.

The draft doesn't clarify whether expenses like brokerage fees, borrowing costs, and margin interest are deductible. The lack of clarity in defining "taxable income" could create confusion and difficulties during implementation, according to the SBBS expert.

Moreover, tax calculation will become much more complex. Anh Duc noted that many investors trade simultaneously across multiple accounts and brokerage firms. At the end of the year, they would have to consolidate all transactions and calculate profits and losses for each stock and holding period. "This is very complicated. With the current method, everything is automatically deducted at the time of the transaction," he said.

Furthermore, tax revenue will become less stable. Anh Duc argued that during strong market periods, like this year, investors can make significant profits. However, when the VN-Index falls sharply, most participants will lose money, impacting tax revenue accordingly.

To ensure the tax policy is effective without causing psychological shock, Anh Duc suggests clarifying taxable income definitions, allowing loss deductions by year, or encouraging long-term investment with preferential tax rates based on holding periods.

Similarly, The Minh suggests a tax based on asset holding time, similar to many other markets. "For example, if investors hold stocks for less than a year, the tax rate could be higher than for those holding for 5-10 years. This encourages long-term investment and limits speculation while ensuring tax revenue," he said.

From a national interest perspective, Nguyen Quang Huy, CEO of the Faculty of Finance and Banking at Nguyen Trai University, believes the income tax on stock transactions needs to balance capital market incentives and budgetary obligations.

Huy recommends a 3-5 year roadmap to transition to taxing actual profits, alongside investing in a national stock account data infrastructure connecting banks, exchanges, and tax authorities. In the short term, he suggests allowing investors flexible tax payment options. Exemptions or reductions for small individual investors, long-term investors, or those reinvesting within 12 months could encourage sustainable capital flow into the capital market, supporting medium- and long-term capital mobilization for businesses.

Trong Hieu - Phuong Dung