Ministry of Finance drops proposal to impose 20% tax on securities and real estate profits

The Ministry of Finance has abandoned the proposal to impose a 20% tax on securities interest. Photo: Le Toan

Drop proposal to impose 20% tax on securities sales profits

In the latest draft of the Law on Personal Income Tax (amended) sent to the Ministry of Justice for appraisal, the Ministry of Finance has finalized the proposed personal income tax (PIT) rate for income from capital transfer and securities transfer.

For resident individuals:

(1) Personal income tax on income from capital transfer of resident individuals is determined by multiplying taxable income by the tax rate of 20% for each transfer.

Taxable income from capital transfer is determined by selling price minus purchase price and reasonable expenses related to generating income from capital transfer.

In case the purchase price and costs related to the capital transfer cannot be determined, personal income tax is determined by multiplying the selling price by the tax rate of 2% (applied uniformly to both resident and non-resident individuals).

(2) Personal income tax on income from securities transfer is determined by multiplying the securities selling price by the tax rate of 0.1% for each transfer.

For non-resident individuals:

(1) Personal income tax of non-resident individuals on income from capital transfer is determined by multiplying taxable income by the tax rate of 20% for each transfer, regardless of whether the transfer is made in Vietnam or abroad.

Taxable income from capital transfer is determined by the transfer price minus the purchase price and reasonable expenses related to generating income from the transfer of capital at Vietnamese organizations and individuals.

(2) For securities transfer and capital transfer activities of non-resident individuals, a tax rate of 0.1% is applied on the transfer price each time.

Thus, for income from securities transfer, the Ministry of Finance has withdrawn the proposal to impose a 20% tax on the profit from securities sale. Instead, the Ministry proposed to maintain the regulation of collecting personal income tax of 0.1% on the transfer price each time.

Eliminate tax on real estate profits

In this draft, the Ministry of Finance also abandoned the proposal to impose a 20% tax rate on income from real estate transfers, calculated on income from each transaction (selling price minus purchase price and related costs).

In the submission attached to the draft law to the Ministry of Justice, there is no mention of the content of amending and perfecting regulations on income subject to personal income tax and how to calculate tax on real estate transfer activities of individuals.

Previously, the Ministry of Finance proposed applying a 20% tax rate to income from real estate transfers, calculated on income from each transaction (selling price minus purchase price and related costs).

In case the purchase price and cost cannot be determined, the tax is calculated directly on the selling price according to the holding period. Accordingly, under 2 years the tax rate is 10%, from 2 to 5 years is 6%, from 5 to 10 years is 4%, over 10 years or real estate originating from inheritance is 2%. Individuals who receive inheritance but have speculative activities will be taxed as real estate business.

The previous method of collecting tax based on the profit from each real estate transaction was considered reasonable in principle, but difficult to implement in practice. The reason is that determining the cost price and related costs in transfer contracts still has many problems, while the data management system has not met the requirements.

Source: https://baoquangninh.vn/bo-tai-chinh-bo-de-xuat-ap-thue-20-tren-lai-chung-khoan-va-bat-dong-san-3374495.html