CaliToday (05/9/2025): In a significant policy reversal that has brought a wave of relief across the investment community, Vietnam's Ministry of Finance (MoF) has officially decided to withdraw its highly-debated proposal to levy a 20% Personal Income Tax (PIT) on profits generated from securities and real estate transactions.
The decision, which was closely watched by the market, effectively maintains the current tax regime for capital gains and removes a major source of uncertainty for individual investors. The news is seen as a positive development expected to bolster market stability and investor confidence.
Details of the Scrapped Proposal
The proposed tax amendment would have fundamentally changed how capital gains are treated in Vietnam. It sought to impose a 20% PIT on the actual net profit an individual makes from a sale. This would be calculated by taking the selling price and subtracting the original purchase price and other related, deductible expenses.
This profit-based model was a significant departure from the current system, which is based on the total transaction value. The proposal was part of a broader government effort to reform tax laws, ensure fairness, and prevent tax evasion, particularly in the real estate sector where price declarations are often under-reported.
Current Tax System to Remain in Place
With the proposal now off the table, the existing tax policies for these transactions will continue to apply:
For Securities Transactions: A flat tax of 0.1% is levied on the total sales value of each transaction, regardless of whether the investor realizes a profit or a loss.
For Real Estate Transfers: A flat tax of 2% is applied to the total transfer price stated in the contract.
Market Reaction and Reasons for the Withdrawal
The proposal had faced considerable pushback from brokerage firms, real estate associations, and individual investors since it was first introduced for public consultation. The primary concerns included:
Administrative Complexity: Critics argued that calculating the exact net profit would be complicated and difficult to enforce. It would require meticulous record-keeping of purchase prices, renovation costs, and broker fees, which could lead to disputes and create a heavy administrative burden for both taxpayers and tax authorities.
Potential for Market Disruption: Many experts feared that a high 20% tax on profits would severely discourage investment. It could reduce liquidity in the stock market, as investors might hold onto assets longer to avoid the tax, and potentially cool down the real estate market by disincentivizing transactions.
The Ministry of Finance's decision to drop the proposal suggests that it has taken this feedback into consideration, prioritizing market stability and administrative simplicity at this time.
"This is a pragmatic and welcome decision," commented a senior analyst at a Ho Chi Minh City-based securities firm. "It removes a cloud of uncertainty that was hanging over the market. Maintaining the current system provides predictability for investors and supports the continued flow of capital into Vietnam's economy."
While the 20% capital gains tax proposal has been shelved, the Ministry of Finance is expected to continue exploring other avenues for tax reform to increase state budget revenue and ensure a fair and transparent tax environment in the long term.
