New Personal Income Tax Cuts Stock Market Trading
Jan. 7 – The implementation of the new Personal Income Tax (PIT) law beginning January 1 has discouraged potential investors, according to Thanh Nien News.
On Monday, 7.3 million shares were traded compared with last year's daily average of 11.8 million.
The PIT law requires stock investors to either pay a 0.1 percent fee of the value of each transaction or 20 percent on their net profit for the year. In addition, those who choose to pay 20 percent on their annual net profit are still required to pay 0.1 percent fee of each sale and the excess tax paid to be refunded at the end of the year.
Brokerage firms told Thanh Nien News that most clients preferred to pay tax on each sale. Some complained that the process of paying 20 percent on their annual net profit was just too complicated so they preferred the 0.1 percent fee on every sale.
A new 5 percent tax on share dividends is causing the most concern for investors, not the 0.1 percent of every sale, added Truong Duy Khiem, branch director of ACB Securities Co.
Brokerage firms are now offering special deals to clients to cope with the effects of the new PIT. One example is the An Binh Securities Co. who offered to pay its clients’ capital gains tax for the first three months of the year while Orient Securities Corp. will pay 80 percent of the tax on transactions worth VND5 billion or more in a month.
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