The Personal Income Tax Law, effective from early 7, includes a new tax exemption for transfers of open-ended fund certificates held for over two years. Previously, such transfers were subject to a 0,1% tax on the sale value, regardless of the holding period.

The new law also reduces the personal income tax on profits received by investors from securities investment funds and real estate investment funds, cutting it from 5% to 2,5%.

In its recent feedback on proposed amendments to the Securities Law, Dragon Capital Fund Management Joint Stock Company highlighted the numerous benefits of tax exemption for long-term fund investments. Primarily, it encourages disciplined savings and investment among the public, moving away from holding idle cash. Such long-term investments alleviate pressure on the social security system and provide capital for the capital market, reducing reliance on bank credit.

Investors monitor the stock market. Photo: Quynh Tran

Vietnam's fund management industry remains nascent compared to its potential. At a conference on fund management industry development late last year, a representative from the Ministry of Finance stated that the country has 43 fund management companies overseeing assets valued at over 800 trillion dong, a sevenfold increase since 2014. The average annual growth rate stands at approximately 20%.

Most domestic individual investors still prefer direct trading over entrusting their capital to professional organizations. Deputy Minister of Finance Nguyen Duc Chi previously urged the securities industry to reorient investor thinking, shifting from "playing the stock market" to "investing in the stock market."

"We must change the perception of retail investors, encouraging them to place their assets and capital with professional fund management companies, based on balanced benefits and shared risks," he said at a seminar early 2025.

According to the Project on Investor Restructuring and Securities Investment Fund Industry Development, the Ministry of Finance aims for the number of investors holding fund certificates to reach 2,5 million within the next five years, increasing to 5 million by 2035. The number of securities investment funds is expected to reach 500 by 2030, followed by a 25% annual increase. The total net asset value of these funds is projected to reach 5% of GDP, before rising to double digits within the next ten years.

To achieve these goals, the project outlines several solutions, including: diversifying types of securities investment funds, expanding distribution channels, and developing new indices such as bond indices, derivatives indices, and sector-specific indices. The tax reduction for long-term fund certificate holders is also mentioned in the project.

Phuong Dong