This change is outlined in the latest draft of the revised Personal Income Tax Law, which the Ministry of Finance submitted to the Ministry of Justice for appraisal. The Ministry of Finance has retracted its proposal to levy a 20% tax on stock sale profits. Instead, the regulatory body will calculate taxes according to current regulations, which is a 0.1% tax on each transfer price.

For capital transfers, the ministry still proposes a 20% tax on taxable income for each transaction. In cases where the purchase price and costs cannot be determined, the seller will be subject to a 2% tax rate.

Previously, in July, the Ministry of Finance proposed that individuals transferring stocks would be subject to a 20% tax rate on their taxable income, determined by the selling price minus the purchase price and reasonable expenses. If the purchase price and expenses cannot be determined, the tax would be 0.1% of the selling price of the stocks for each transaction, following the current regulations.

The 2007 Personal Income Tax Law, effective from 2009, stipulates two methods of taxing stock transfers. In cases where tax is applied to annual taxable income, individuals provisionally pay a 0.1% tax on each sale price, and at the end of the year, this tax is deducted when settling their tax liability. If the cost basis and related expenses cannot be determined, they pay a 0.1% tax on each sale price and do not have to settle their tax liability at the end of the year.

Since 2013, Law No. 71/2014, which amends and supplements several articles of tax laws, has stipulated a unified method of calculating personal income tax on stock transfers using a 0.1% rate on each transfer price. However, many opinions suggest that taxing even in cases of losses is inappropriate. Therefore, experts have repeatedly recommended that the government should determine a method of taxing individual income where tax is only payable on profits.

Experts viewed the Ministry of Finance's previous proposal to only tax profitable stock investments as fair, but the 20% tax rate was considered higher than in many other countries. Analysts suggest that the government should establish a 3-5 year roadmap to transition to taxing actual profits, while simultaneously investing in the national stock account data infrastructure system, connecting banks, stock exchanges, and tax authorities.

Phuong Dung