In the draft new Personal Income Tax Law now under public consultation, MOF proposes that resident individuals transferring securities face a 20 percent tax rate on taxable income. Taxable income from transfers is calculated as the selling price minus the purchase price and reasonable costs related to generating income from securities transfers in the annual tax period.

If the purchase price and related costs cannot be determined, PIT is calculated at 0.1 percent of the selling price per transaction.

Previously, the 2007 PIT Law (effective from 2009) outlined two taxation methods for securities transfers: 20 percent on annual income or 0.1 percent on the selling price per transaction, with no year-end tax settlement required.

The 2014 Law No71/2014/QH13 (effective from 2015) unified the PIT calculation for securities transfers at 0.1 percent of the transaction value per transfer.

About the new proposal, the research director of a securities firm stated that the 20 percent tax on profits is too high and, if implemented, would significantly impact the market. Vietnam’s stock market is dominated by small investors who hold stocks for the short term, with few opting for long-term investments.

Moreover, Vietnam’s stock market cannot be compared to developed markets. Many frontier markets, like Vietnam, even exempt such taxes.

Phan Van Nhan SSI Securities, also believes the proposed 20 percent tax on securities transfer profits is too high and not feasible for both long-term and short-term (T+) investors. If implemented, many investors might abandon the market.

Nhan cited DIG stock as an example. In 2021, it surged from VND20,000 per share to VND100,000 per share, then plummeted to VND10,000 per share in 2022.

If long-term investors bought at VND20,000 and only sold a long time later when the price surged to VND100,000, they would have to pay tax of VND100 per share (if the tax rate is 0.1 percent of transaction value). 

However, under the new proposal, the tax would be 20 percent of the profit (VND100,000 - VND20,000 = VND80,000), equivalent to VND16,000 per share, or 160 times higher than the current rate.

In another case, short-term investors may sell at VND100,000 per share (profiting VND80,000), and then pay VND16,000 in tax, and buy back at VND100,000. If the stock later drops to VND20,000, the investors lose VND80,000. 

So, though investors would break even after two transactions, they would still have to pay VND16,000 in tax. With an initial investment of only VND20,000, this tax causes significant losses.

If the investors hold the stock for two years, with the price rising from VND20,000 to VND100,000 and then falling back to VND20,000 without selling, they break even and owe no tax.

Thus, simply selling at VND100,000 and buying back at the same price results in a VND16,000 loss, equivalent to 80 percent of the initial VND20,000 investment.

This could lead to reduced trading and lower liquidity, while the market, already lackluster much of the time, would be even less attractive to investors.

Vietnam’s stocks fluctuate, investors suffer

Phan Van Nhan noted that Vietnamese stocks are highly volatile, rising and falling quickly. In contrast, in countries like the US, major stocks grow steadily over time, often for decades, alongside corporate development.

Thus, in years when stock prices rise, the state collects 20 percent of profits, but in downturn years, investors face significant losses. For instance, DIG stock, from 2021 to the close of trading on July 22, 2025, remained flat at VND20,500 per share, despite peaking at VND100,000 per share.

Nhan pointed out that US companies are global, with decades-long growth cycles. For stocks with stable, long-term growth, taxing securities profits is reasonable. Vietnamese companies, however, are smaller, with short growth cycles, often lasting just a few years or quarters.

With Vietnam’s stocks being highly volatile and the market often lackluster, a high tax rate would add further challenges. Thus, Nhan suggests maintaining the 0.1 percent tax on transaction value per trade to encourage investor participation.

Manh Ha