VietNamNet Bridge - Unclear taxation guidelines are confusing securities investors and companies. The guidelines are contained in Ministry of Finance (MoF) Document 42/BTC-TCT and the State Securities Commission (SSC) 22/UBCK-PTTT.

Stock market players are looking for some guidance

The documents, investors claim, fail to clearly state how investment income can be taxed. According to Personal Income Tax Law(PIT) tax can be paid by deducting in advance 0.1 per cent of investors’ earnings directly from every successful sell order or paying 20 per cent of year’s profits at the year end.

The later method was based on real income investors earned.

However, for investors choosing this method, it is unclear what is the buying price of listed stock while calculating net income. For example, an investor who buys two lots of shares of a company at VND25,000 and VND30,000. Later, he sells one lot at VND28,000. So which would be the buying price?

Selling prices for unlisted stocks are based on the contract and if the price is not given in the contract or lower than book value, it will be calculated on book value. Again, book value remains unclear. Is it the price in a company’s prospectus, in company’s financial statements, or in the assessment of qualified independent appraiser?

Le Thi Mai Linh, vice head of Management Board of SeaBank Securities Corporation, said calculating tax based on book values was inaccurate as there were many stocks traded at lower prices than book value. Nguyen Van Dung, Tan Viet Securities manager, said there should be a qualified independent appraiser to calculate real value of stock.

If a contract price was lower than book value, tax should also be calculated based on market price rather than book value, said Dung.

Also, under the Article 4, Section 6 of the new Corporate Income Tax law, companies’ dividends coming from investment in other enterprises will not subject to tax. However, under the PIT Law, investors still have to pay 5 per cent tax for the dividends they get. This is the inequity against independent investors as compared to corporate ones.

Additionally, if investors get dividend for shares and sell these shares later, this dividend is subjected to be taxed twice. Authorities should quickly make a final decision about PIT and provide more details, said Son. Currently, investors and securities companies are asking for the suspension of PIT imposed on investment incomes.

In order to support investors and raise demand, some securities companies such as An Binh Securities Company (ABS), VNS Securities Company have paid tax for investors.

(Source: VIR)