Latest news with #PersonalIncomeTaxLaw
The Star
a day ago
- Business
- The Star
Vietnam's new tax plan likely to discourage investment
HANOI: Last week's draft proposal by the Ministry of Finance to impose a 20% personal income tax on profits from securities trading has sparked widespread debate among legal experts, market participants and industry bodies. Many have warned it could discourage investment and hinder the growth of Vietnam's fledgling capital market. The proposal is part of the ministry's plan to amend the Law on Personal Income Tax, which includes new regulations for taxing individual earnings from stock market activities. Speaking to Tuoi Tre (Youth) newspaper, the chief executive officer (CEO) of a credit rating agency said that the 20% tax on investment profits is not a new concept. Previously, the Personal Income Tax Law allowed individuals to choose between two methods: a provisional tax of 0.1% on the transfer value or applying a 20% tax rate on net income. The 0.1% tax on the transfer value was uniformly applied for convenience and to prevent revenue loss. The CEO noted that technically, securities companies are able to track the cost base and profit for each stock, so calculating tax on gains is no longer difficult. However, he cautioned that the proposed 20% rate is excessively high and could disincentivise retail investors from entering the market. Phan Phuong Nam, vice-dean of the International Law Faculty at Ho Chi Minh City University of Law, said that investors should be allowed to choose between the two taxation methods, with a gradual shift towards taxing only net profits to ensure fairness. 'If the flat 20% tax is applied, investors should also be allowed to carry forward losses, as many experience gains only in one year after several years of investment,' Nam said. He also proposed applying family deductions for professional investors, who rely solely on securities income to align with the principles of equitable taxation. Nguyen Hoang Hai, vice-chairman of the Vietnam Association of Financial Investors (VAFI), raised concerns over how interest expenses would be allocated for tax purposes. 'If someone borrows five billion dong to invest in multiple stocks, but only sells one, how would you allocate that interest expense in a way that is acceptable to the tax authorities?' Hai asked. He also highlighted that many investors use collateral like real estate to obtain investment loans, further complicating expense tracking. A securities firm's executive pointed out that Vietnam's capital market is still at an early stage of development and should be nurtured rather than overtaxed. 'Tax authorities should focus on growing the tax base by encouraging long-term market participation. Overtaxing could stifle future revenue potential,' he said. Nguyen The Minh, head of the Research and Development Division at Yuanta Securities Vietnam, acknowledged that taxing investment profit aligns with international standards. Still, he recommended a tiered tax system based on holding periods. 'Higher tax rates could apply for stocks held under one year, while long-term investments, over 10 years, could be tax-exempt. 'This would both discourage speculative trading and incentivise long-term investment,' Minh said. Another controversial proposal in the draft is to tax stock dividends and bonus shares at the time of issuance, rather than when the investor sells the shares. 'Taxing stock dividends immediately upon issuance would make this option less attractive and reduce a valuable tool for companies to reinvest profits,' according to the Vietnam Chamber of Commerce and Industry (VCCI). The General Department of Taxation pointed out that personal income tax collected from securities-based dividends between 2016 and last year totalled more iesthan 1.3 trillion dong. However, under the proposed change, this figure could have reached 17.4 trillion dong, a more than 13-fold increase. VCCI emphasised that most investors tend to hold such shares long-term, which suggests the deferred tax method better supports reinvestment and enterprise growth. 'The 10 trillion dong in 'uncollected' taxes is actually retained by businesses and channelled into production, job creation and gross domestic product growth. 'Taxing it prematurely could disrupt this cycle,' the organisation warned. VCCI further noted that receiving stock dividends does not create immediate income for shareholders, as there is no increase in real asset value at the time of issuance. 'This is a technical adjustment in capital structure. Imposing tax here burdens investors financially without corresponding liquidity, especially for those who do not immediately sell the shares,' the chamber argued. Such a move, they stressed, could erode confidence in long-term investing. 'Investors may ask: 'Why receive shares and face future uncertainty when cash dividends offer immediate income and the ability to pay taxes upfront'?' VCCI recommended that lawmakers retain the current policy of collecting personal income tax on securities only at the point of transfer. This approach not only safeguards investor interests but also supports sustainable revenue streams and corporate development. Last week, the Ministry of Finance also proposed a 20% tax on income from real estate transactions, which would be calculated based on the profit from each transaction (selling price minus purchase price and related costs). If the purchase price and costs cannot be determined, the tax will be directly applied to the selling price, taking into account the holding period. — Viet Nam News/ANN
Business Times
5 days ago
- Business
- Business Times
Vietnam mulls overhaul of property transfer tax, sparks fears of stalling recovery
[HO CHI MINH CITY] Vietnam's Ministry of Finance has unveiled a sweeping proposal to overhaul the way personal income tax is applied to real estate transactions – replacing the current flat 2 per cent levy on selling price with higher percentages, based on how long the property is held, or 20 per cent of the actual capital gains per transaction. The ministry states that the change is necessary to plug tax loopholes, reduce speculation, and create a more equitable tax regime. However, industry stakeholders warn that the shift could dampen liquidity, inflate prices for real homebuyers, and further weaken an already-fragile property market. Under the proposal, individuals selling real estate would be taxed 20 per cent on the net profit, which is the difference between the selling price and the original purchase price, minus related costs. In cases where the purchase price or expenses cannot be verified, tax would be applied to the gross sale value, based on how long the property was held. That marks a sharp increase from the current flat 2 per cent tax on the selling price to as much as 10 per cent for properties owned for less than two years. The ministry says the new model better reflects true earnings and is modelled after systems used in Singapore, Taiwan and Malaysia, where tax rates also scale with holding periods to deter speculative flipping. In Singapore, for instance, residential properties resold within a year are subject to a 100 per cent tax on the price gain. In Malaysia, the Real Property Gains Tax imposes rates of up to 30 per cent on properties sold within three years. A NEWSLETTER FOR YOU Friday, 8.30 am Asean Business Business insights centering on South-east Asia's fast-growing economies. Sign Up Sign Up The latest shift in the rule, outlined in the draft of the revised Personal Income Tax Law, is now open for public consultation until the end of this month and is expected to go before the National Assembly for review and approval this October. Huynh Thi Huong Giang, head of research at property advisory firm Savills in Ho Chi Minh City, said: 'From my perspective, applying this tax model under current conditions without adequate infrastructure would be very challenging.' She noted that Vietnam's property data system remains fragmented, with transfer prices largely based on declared values in sales agreements, and that actual transaction prices are often higher. '(We expect) a negative impact on market liquidity, potentially slowing down transaction processes, causing tax collection bottlenecks, and increasing the risk of disputes and legal conflicts,' she noted. Sellers may also respond to higher taxes by raising housing prices to maintain their profit margins, potentially making homes less affordable for genuine buyers, Giang added. Nguyen Thi Thu Xuan, a Hanoi-based investor who frequently buys and resells homes with a group of friends, believes that speculative investing will continue both in undervalued properties and amid rising market prices due to a supply crunch. 'It won't hurt us as much as it hurts end-buyers who actually need a home,' she said, noting that additional tax costs could push prices even higher. Xuan added that in practice, if sale prices are not truthfully declared, a 10 per cent or 20 per cent tax is mostly symbolic. 'It doesn't mean higher tax costs,' she said. 'In fact, steeper rates might just drive more people to exploit loopholes and under-report transactions.' The finance ministry appears aware of the challenges in applying the new property tax rule. In a response to local media reports, officials stressed the need for a gradual transition with a suitable road map, tied to the development of land and housing policies, data infrastructure and legal frameworks for tracking and taxing property profits. Problematic timing Dinh Minh Tuan, southern regional director at PropertyGuru Vietnam, which owns the country's largest real estate portal said the timing of applying the new rule was problematic. 'While the policy aims to 'reward holders, penalise flippers,' it also raises concerns about timing and broader market impact, especially as the real estate sector remains sluggish,' he stated in a commentary. 'The proposal may prove more harmful than beneficial.' Vietnam's real estate market plunged into a slump in 2022 and 2023, with supply freezing up, liquidity drying out, and many housing projects stalling. Transactions started picking up in 2024 and 2025, showing signs of market recovery following a series of regulatory reforms. However, property prices have been soaring exponentially due to supply-demand imbalance and speculative buying, making them out of reach for most residents. In major urban centres such as Hanoi and Ho Chi Minh City, it now takes several decades of the disposable income of a family at the median to purchase an apartment. 'We expect residential prices to continue their upward trajectory (for the rest of the year), largely driven by the launch of high-end projects and ongoing supply constraints,' noted Savills' Giang. A survey of more than 1,000 users found that 59 per cent bought real estate primarily for investment, not for personal use, and many were planning to sell within the year. Tuan noted that short-term investors now make up a significant share of the market, especially in segments of land plots and high-end condominiums. 'A 10 per cent tax would significantly eat into profit margins, reducing investment appeal and potentially pushing small investors out, further dampening market liquidity,' he stated. He believes this tax hike could act as an untimely brake, stalling the recovery momentum and causing ripple effects in related sectors of the economy. The Vietnamese government is aiming for 8.3 to 8.5 per cent economic growth this year, from 7.1 per cent last year, to create a foundation for double-digit growth in the 2026-2030 period. Prime Minister Pham Minh Chinh recently emphasised that Vietnam must revitalise its traditional growth engines – domestic consumption, exports and investment – while also embracing new drivers such as green growth and the digital economy. With US tariff hikes weighing on trade, experts say that a rebound in the real estate market and increased infrastructure spending would be crucial to boosting consumer confidence in the country's economy, where household consumption contributes to about 60 per cent of the gross domestic product.
Business Times
5 days ago
- Business
- Business Times
Vietnam mulls property transfer tax overhaul, sparking fears of stalled recovery momentum
[HO CHI MINH CITY] Vietnam's Ministry of Finance has unveiled a sweeping proposal to overhaul the way personal income tax is applied to real estate transactions – replacing the current flat 2 per cent levy on selling price with higher percentages based on how long the property is held or 20 per cent of the actual capital gains per transaction. The ministry states that the change is necessary to plug tax loopholes, reduce speculation, and create a more equitable tax regime. However, industry stakeholders warn the shift could dampen liquidity, inflate prices for real homebuyers, and further weaken an already fragile property market. Under the proposal, individuals selling real estate would be taxed 20 per cent on the net profit, which is the difference between the selling price and the original purchase price, minus related costs. In cases where the purchase price or expenses cannot be verified, tax would be applied to the gross sale value based on how long the property was held. That marks a sharp increase from the current flat 2 per cent tax on selling price to as much as 10 per cent for properties owned for less than two years. The ministry says the new model better reflects true earnings and is modelled after systems used in Singapore, Taiwan and Malaysia, where tax rates also scale with holding periods to deter speculative flipping. In Singapore, for instance, residential properties resold within one year are subject to a 100 per cent tax on the price gain, while in Malaysia, the Real Property Gains Tax imposes rates of up to 30 per cent on properties sold within three years. A NEWSLETTER FOR YOU Friday, 8.30 am Asean Business Business insights centering on South-east Asia's fast-growing economies. Sign Up Sign Up The latest rule shift, outlined in the draft of the revised Personal Income Tax Law, is now open for public consultation until the end of this month and is expected to go before the National Assembly for review and approval this October. 'From my perspective, applying this tax model under current conditions without adequate infrastructure would be very challenging,' said Huynh Thi Huong Giang, head of research at property advisory firm Savills in Ho Chi Minh City. She noted that Vietnam's property data system remains fragmented, with transfer prices largely based on declared values in sales agreements, even though actual transaction prices are often higher. '(We expect) a negative impact on market liquidity, potentially slowing down transaction processes, causing tax collection bottlenecks, and increasing the risk of disputes and legal conflicts,' she noted. Sellers may also respond to higher taxes by raising housing prices to maintain their profit margins, potentially making homes less affordable for genuine buyers, Giang added. Nguyen Thi Thu Xuan, a Hanoi-based investor who frequently buys and resells homes with a group of friends, believes that speculative investing will continue both in undervalued properties and amid rising market prices due to a supply crunch. 'It won't hurt us as much as it hurts end-buyers who actually need a home,' she said, noting that additional tax costs could push prices even higher. Xuan added that in practice, if sale prices aren't truthfully declared, a 10 per cent or 20 per cent tax is mostly symbolic. 'It doesn't mean higher tax costs,' she said. 'In fact, steeper rates might just drive more people to exploit loopholes and underreport transactions.' The finance ministry appears aware of the challenges in applying the new property tax rule. In a response to local media, officials stressed the need for a gradual transition with a suitable road map, tied to the development of land and housing policies, data infrastructure, and legal frameworks for tracking and taxing property profits. Problematic timing Dinh Minh Tuan, southern regional director at PropertyGuru Vietnam, which owns the country's largest real estate portal says the timing of applying the new rule is problematic. 'While the policy aims to 'reward holders, penalise flippers,' it also raises concerns about timing and broader market impact, especially as the real estate sector remains sluggish,' he stated in a commentary. 'The proposal may prove more harmful than beneficial.' Vietnam's real estate market plunged into a slump in 2022 and 2023, with supply freezing up, liquidity drying out, and many housing projects stalling. Transactions started picking up in 2024 and 2025, showing signs of market recovery following a series of regulatory reforms. However, property prices have been soaring exponentially due to supply-demand imbalance and speculative buying, making them out of reach for most residents. In major urban centres such as Hanoi and Ho Chi Minh City, it now takes several decades of a family's median disposable income to purchase an apartment. 'We expect residential prices to continue their upward trajectory (for the rest of the year), largely driven by the launch of high-end projects and ongoing supply constraints,' noted Savills' Giang. A survey of more than 1,000 users found that 59 per cent bought real estate primarily for investment, not for personal use, and many plan to sell within the year. Tuan noted that short-term investors currently make up a significant share of the market, especially in segments of land plots and high-end condominiums. 'A 10 per cent tax would significantly eat into profit margins, reducing investment appeal and potentially pushing small investors out, further dampening market liquidity,' he stated. He believes this tax hike could act as an untimely brake, stalling recovery momentum and causing ripple effects across related sectors of the economy. The Vietnamese government is aiming for 8.3 to 8.5 per cent economic growth this year, from 7.1 per cent last year, to create a foundation for double-digit growth in the 2026-2030 period. According to a recent statement, Prime Minister Pham Minh Chinh emphasised that Vietnam must revitalise its traditional growth engines – domestic consumption, exports, and investment – while also embracing new drivers such as green growth and the digital economy. With US tariff hikes weighing on trade, experts say that a rebound in the real estate market and increased infrastructure spending will be crucial to boosting consumer confidence in a key driver of Vietnam's economy, where household consumption makes up around 60 per cent of its gross domestic product.
Gulf Insider
01-07-2025
- Business
- Gulf Insider
Oman: 16 Income Sources Exempted From New Individual Income Tax
Oman has announced key exemptions under its new Personal Income Tax Law, which is set to come into effect on January 1, 2028, according to the official Gazette. The law introduced a 5% tax on individuals earning more than OMR 42,000 annually. However, with this relatively high threshold, the Tax Authority estimates that around 99% of the population will remain unaffected. The issuance of Oman's first-ever Personal Income Tax Law, enacted under Royal Decree No. 56/2025, is part of the country's broader efforts to promote fiscal diversification and long-term economic sustainability under Oman Vision 2040. The law outlines 16 types of income that are exempt from personal income tax under Article 25. These include: 1. Salaries received by members of diplomatic and consular missions and other diplomatic representatives from foreign countries or international organisations, within the scope of official duties—subject to reciprocity. 2. Living allowances paid to Omani residents working in diplomatic missions (excluding diplomats themselves). 3. Income earned abroad by a tax resident for 18 months following a change in residency status. 4. Salaries and wages earned abroad by Omani tax residents. 5. Contributions to pension and post-service benefit schemes, whether mandatory or optional, up to two schemes. 6. Educational expenses for the individual, spouse, first-degree relatives, and dependents—within limits set by regulation. 7. Healthcare expenses for the individual, spouse, first-degree relatives, and siblings under their care—as specified in the regulations. 8. Income from a primary residence, provided the residence has been declared to the Tax Authority for at least two years. 9. One-time lifetime exemption on income from the sale of a secondary residence. 10. Zakat and charitable donations (including endowments) to approved entities, up to 5% of gross income. 11. Returns on investment certificates issued by the Government of Oman, and income from their sale. 12. Interest earned from government bonds and notes, and proceeds from their sale. 13. Compensation payments received for any reason, excluding salary or wage compensation. 14. Income from inheritance, wills, grants, or gifts between spouses or first-degree relatives. 15. Interest on housing loans or Islamic financing for a primary residence—one-time, lifetime exemption under regulated conditions. 16. Income from industrial property rights (patents, trademarks, designs, etc.) for five years from the date of registration. In 2024, Oman collected OMR 1.4 billion in revenue from corporate income tax, VAT, and selective taxes. The introduction of personal income tax is expected to complement these existing streams, strengthen fiscal credibility, and enhance Oman's attractiveness to international investors. This landmark law positions Oman alongside other Gulf countries that are shifting toward diversified, non-oil revenue models, marking a significant evolution in the region's economic landscape.
Gulf Insider
26-06-2025
- Business
- Gulf Insider
Oman Announces 5% Income Tax: Everything You Need to Know
Oman will introduce the Gulf region's first personal income tax on high earners starting January 1, 2028, marking a historic shift in its fiscal strategy. The personal income tax (PIT) for high earners marks a major shift in Oman's fiscal policy as part of the broader Vision 2040 agenda to diversify national income and ensure long-term financial sustainability. The Personal Income Tax Law, issued by Royal Decree No. 56/2025, comprises 76 articles across 16 chapters. It imposes a 5 per cent tax on the taxable income of individuals whose gross annual income exceeds OR42,000 ($109,100), derived from income categories defined in the legislation. The law will officially come into force at the start of 2028. Effective Date: January 2028 Threshold: Income above OR42,000 ($109,100) annually Tax Rate: 5 per cent Exemptions: 99 per cent of citizens, plus deductions for key social needs Purpose: Fiscal sustainability, economic diversification, social equity Impact: Minimal GDP effect, no expected impact on foreign investment Dr. Said Mohammed Al Saqri, Minister of Economy, said: 'The tax serves as a new revenue stream to diversify public income sources and mitigate risks associated with reliance on oil as the primary revenue source. 'It will help maintain current levels of social and service spending while preserving Oman's achievements in financial and economic stability under 'Oman Vision 2040' and its first executive phase, the Tenth Five-Year Plan (2021-2025).' According to Oman's Tax Authority, the exemption threshold was determined after a comprehensive economic and social impact study based on income data from multiple government bodies. As a result, approximately 99 per cent of Omani citizens will not be affected by the tax. To address social equity, the law includes deductions for education, healthcare, housing, zakat, donations, and inheritance, among others. Karima Mubarak Al Saadi, Director of the Personal Income Tax Project, confirmed that all necessary preparations and requirements for implementing the tax have been completed. The Tax Authority confirmed the development of a digital tax declaration system integrated with other government entities to promote voluntary compliance. The executive regulations of the law will be issued within one year of its publication in the Official Gazette. Currently, 68 per cent to 85 per cent of Oman's income is derived from oil and gas, depending on global prices. While prices have been favourable recently, the government warns of long-term volatility. The PIT law seeks to secure sustainable funding and mitigate reliance on hydrocarbons. Dr. Said Mohammed Al Saqri, explained that the (PIT) is a fiscal tool adopted by most countries worldwide as a key revenue source to fund state-provided services. More than 190 countries impose this tax, and in many, income taxes constitute the largest component of total tax revenues at federal and local levels, financing public goods and services. He noted that implementing the tax in Oman will yield significant economic benefits, supporting income diversification strategies and long-term fiscal stability as a pillar of economic growth. He added that the foreign investment is expected to remain unaffected, as the tax applies to individuals—not corporate entities—and Oman's rates remain competitive globally, the minister concluded. The 2025 national budget allocates more than OR5bn ($13bn) to essential services: Education: 39 per cent Healthcare: 24 per cent Social Protection: 28 per cent The Social Protection Fund currently supports over 2 million beneficiaries monthly, with PIT revenue expected to further strengthen the program. Also read: Oman Expands Plastic Bag Ban To Retail And Food Sectors In Third Phase Of National Plan
