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Securities taxes to take effect January 1   2009-12-16 - Viet Nam News

Provisions of the new Law on Personal Income Tax applicable to taxation of dividend income and capital gains on securities trading will take effect on January 1, along with other provisions of the law which were delayed last year during the economic downturn, said Vu Van Truong, director of the Ministry of Finance’s tax policy department.

The new taxes were suspended for all of 2009 as part of the Government’s stimulus package and to help sustain the stock market during the downturn.

Pursuant to the law, investors will have two options for paying the capital gains tax: either a flat 0.1-per cent levy on the value of each securities transaction, or a 20-per cent tax on net capital gains during the tax year.

However, individuals opting to apply the 20-per cent rate would still be temporarily charged the 0.1-per cent levy on each securities transfer, Truong said.

“Most investors will opt for the 0.1-per cent option due to the simple and transparent procedures for paying the tax with each transaction, as well as to avoid tedious and complicated formalities of tax computation and filing returns at the end of the year,” opined An Phat Securities Co general director Tran Thien Ha.

The 20-per cent scheme would also become even harder to implement once regulations permit investors to open accounts at more than one securities company at a time, added a representative from the State Securities Commission.

Tan Viet Securities Co deputy director Hoang Xuan Quyen predicted the tax would have little impact on the market as securities companies and investors have been aware it was coming since the end of last year.

Still, some investors were calling for officials to apply additional flexibility in levying the tax, and consider adjustments to the tax rate to minimise its impact on market liquidity at a time when the market was undergoing a deep and prolonged correction.

"When the market is unstable or suffering a period of steep decline, the additional burden of tax payments can adversely affect investor psychology," agreed To Tran Hoa, an officer of the Ha Noi Stock Exchange bond department.

Tax on securities trades will be collected by securities companies. Unlisted companies will be responsible for collecting the tax on behalf of their shareholders.

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