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Finance minister hints at delay to new taxes
The Ministry of Finance is planning to ask the National Assembly to delay imposing capital gains taxes on securities investments until the end of next year to encourage investors and support stock market growth.
Minister of Finance Vu Van Ninh said this on the sideline of a financial sector meeting on Wednesday.
The new taxes, including those on dividend income, are currently slated to take effect on January 1 and are being criticised as likely to have a further depressing effect on an already troubled market.
Just two weeks ago, the Ministry of Finance’s taxation policy department said that the Government had no intention of delaying imposition of the new taxes, which would take effect along with other provisions of the new Law on Personal Income Tax.
But by Wednesday, Ninh was telling reporters that the ministry was reconsidering the time at which it might be most appropriate to levy the taxes, as well as some tax exemptions or reductions it might submit to the National Assembly Standing Committee for consideration.
Ninh said that should the taxes take effect as scheduled on January 1, the ministry would consider some technical measures that would enable the calculation of investor incomes for the purpose of levying the taxes at the end of next year.
Nguyen Thanh Ky, chairman of the Viet Nam Association of Securities Businesses said that at a time when most investors in the stock market were suffering losses, postponing imposition of new taxes would help stimulate demand and facilitate market development.
Ky figured lost tax revenues at a time when few investors were seeing gains would be small, but the delay could ease investors’ minds.
If the tax were to take effect as scheduled, investors might also sell off shares during the remainder of this year to avoid tax liablitity, he said, which would worsen the market situation.
"Delaying the tax would demonstrate the Government’s flexibility as well as its determination to develop the financial markets," he said.
"The move would have psychological impact," said the chief representative of the Dragon Capital Investment Fund in Ha Noi, Phan Minh Tuan, suggesting the taxes be imposed at a time when the market is posting gains.
"When investors are excited with making profits, taxes will not affect the market," he said.
Huynh Anh Tuan, a securities expert, said Government monetary and fiscal measures to support enterprises and investors were necessary in the context of global economic recession.
He said postponing the tax on securities investments, alongside today’s cut in the prime interest rate – was a positive move for the market, although he admitted that a delay in the tax would not likely bring about significant changes to the market.
"Institutional investors are not likely to invest now at year-end, especially when market trends have not yet been determined," he said.
The Government has already agreed to reduce the corporate income tax by 30 per cent in the fourth quarter of this year to ease difficulties for enterprises amid the economic slowdown, Ninh said on Wednesday. Tax payments could now be extended to nine months rather than six, he added, to further ease pressure on corporate cash flows.
VNS
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