Tax policies play a crucial role in shaping each country’s stock market. In the ASEAN region, differences in tax policies not only influence domestic investors’ investment decisions but also serve as a key factor in attracting foreign capital. Vietnam, with its rapidly developing stock market, faces numerous challenges and opportunities in establishing competitive tax policies.

Tax policies on securities investment activities have a direct impact on the ability to attract foreign investment. A transparent, fair, and effective tax system not only creates a favorable investment environment but also contributes to the sustainable development of the capital market.

Although still young compared to Singapore or Thailand, Vietnam’s stock market has made significant progress over the past decade. Similarly, ASEAN stock markets such as Malaysia, Indonesia, and the Philippines are also continuously improving to enhance their competitiveness in the region.

This article will provide a comprehensive analysis of the tax system applicable to stocks in Vietnam, compare it with other ASEAN countries, and assess the impact of these policies on the competitiveness of the Vietnamese stock market in the region.

I. Overview of the stock tax system in Vietnam

1. Types of taxes applicable to stock transactions and income from stocks

The tax system for securities investment activities in Vietnam primarily includes personal income tax (PIT), corporate income tax (CIT), and certain other transaction taxes and fees. Specifically:

• Tax on income from the transfer of securities
• Tax on dividend income
• Capital gains tax

2. Personal income tax on dividends and capital gains

For individual investors in Vietnam, income from securities investments is subject to PIT as follows:

• Cash dividends: A tax rate of 5% on the total amount of dividends received
• Dividends in the form of shares are not subject to tax upon receipt. Individuals are only required to pay personal income tax (PIT) when selling or transferring such shares. When sold, the PIT rate is 0.1% of the transfer value
• Income from the transfer of securities: A tax rate of 0.1% on the total transfer value or 20% on taxable income applies.

Investors may choose one of two tax calculation methods for income from the transfer of securities: a tax rate of 0.1% on the total transaction value (without deducting expenses) or a tax rate of 20% on taxable income (with deducting related expenses). The second method requires investors to file an annual tax settlement.

3. Corporate income tax on securities investments

For domestic organizations and businesses:

• Dividends: No corporate income tax is payable on dividends received from companies that have already paid corporate income tax.
• Profits from the transfer of securities: Subject to CIT at a rate of 20% on taxable income

4. Taxes for foreign investors

Foreign investors in Vietnam are subject to the following tax rates:

• Tax on dividends: 5% (may be reduced under a double taxation avoidance agreement)
• Tax on securities transfers: 0.1% of the total transfer value
• Foreign institutional investors: Subject to corporate income tax at a rate of 20% on taxable income from the transfer of securities.

https://luatminhnguyen.com/en/tax/comprehensive-tax-compliance-guide-for-foreign-investors/

5. New proposals on tax on stock dividends and their impact

Recently, Vietnam has proposed the imposition of taxes on stock dividends. Under the proposal, stock dividends would be treated as income and subject to personal income tax at a rate of 5%. This proposal has sparked significant debate and concerns about its negative impact on the Vietnamese stock market.

Please read Part 2 of the analysis comparing stock taxes in ASEAN countries

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