The inflation rate may be two digits for 2007, according to Dr Tran Dinh Thien, Deputy Head of the Vietnam Economics Institute. In order to stabilise prices in this context, the government should reconsider the targeted 9% economic growth rate.
All countries in the world bear the same pressure from the price increases. How can they all successfully control the prices in their domestic markets?
The structure of the basket of goods which is used for calculating consumer price index (CPI) in Vietnam is different from those in other countries. In our ‘basket’, food and foodstuff products account for more than 40% of total product and service items, while the proportion is smaller in other countries’ baskets. In poor and developing countries with low development levels, more raw products are listed in the ‘basket’. Therefore, in controlling prices, the government should draw up solutions considering the specific characteristics of Vietnam.
What are solutions then?
The government is now focusing on lowering taxes in order to stabilise the prices of key products, like oil and petrol, and steel, which can help stimulate growth. Meanwhile, the prices of food and foodstuffs will not see big increases.
Do you think tax reductions will help stop the price increase wave?
It is necessary not only to lower taxes but also to issue government bonds to withdraw cash from circulation. It is necessary to lower government spending. Reality shows that when the inflation rate is too high, the most important thing to do is to urgently cut government spending and raise interest rates in order to attract idle capital from the public. Currently, the budget overspending remains within control. But I have to say that the government still has to cut expenditures in the context of overly high price increases, causing the inflation. The expenditure cuts will help reduce the inflation rate.
Experts have forecast that prices will keep rising towards the year’s end due to many factors. Could you please give other reasons behind the price increases?
In the first six months of the year, the government disbursed less than 50% of investment capital, while it is striving to reach the growth rate of 9% this year. Therefore, the government has to pump more money in the economy from now until the year’s end.
Factors that may cause price increases in the last months of 2007 prove to be very strong, while the volume of cash in circulation remains very big. I think that the price increase will be two digits.
However, I do not think that inflation has reached the chaotic level. We can control the situation if the inflation rate is less than 10%, and it would be fine if we could not gain the targeted economic growth rate of 9% this year.
Source: VNE
Showing posts with label Taxation. Show all posts
Showing posts with label Taxation. Show all posts
Tuesday, August 07, 2007
Friday, July 13, 2007
25% tax on securities earnings not too high
The Deputy Minister of Finance, who drafted the bill on personal income tax, Truong Chi Trung, explained why the tax rate on securities earnings should be 25%.
Some experts said that the suggested 25% tax rate on capital assignment proves to be too high. What is the basis for the compilation committee’s decision that the tax rate should be 25%?
When designing the tariff, we planned to set the same tax rate on the capital assignment and real estate assignment at 25%, to make the tariff transparent and simple. The basis for the decision is the currently applied tax rate of 28% imposed on the earnings from securities investments of institutions and enterprises (individual securities investors now enjoy tax exemption).
The compilation committee thinks that there should not be a too big gap between the tax rates on individuals and institutions, which would prompt tax evasion. In other countries in the region, the tax sums securities investors have to pay may be ½, ¼ or 1/5 of the income from capital assignment. We have considered these cases thoroughly, and decided that the 25% rate would be a suitable rate, not overly high if compared to other countries.
VAFI (Vietnam Association of Financial Investors) has proposed lower tax rates, 5%-10%. What would you say about the suggestion?
As for the income tax, it is impossible to design different tax rates for different investors. We can only impose different tax rates on residential and non-residential investors. As I have said, the too big gap between the rates on individual and institutional investors will encourage institutional investors to evade tax by assuming individuals’ names. This is a taboo in designing tax policies.
In fact, individual investors cannot get big profit as institutional investors can, because individuals do not have much experience in doing business. Do you think that it would be unreasonable to impose the same tax rates on individuals and other subjects?
As for individual investors, tax policies always aim to encourage investment. The tax designed for these investors has never been too high to keep them away from the market.
In the last few years, the state, aiming to stimulate the market, has been applying policies of tax exemption for many subjects. In fact, the collection from securities earnings has just accounted for a small proportion of the state budget collection. However, as the market develops, it would be necessary to amend the policies to make them more suitable to the new circumstances. Besides domestic investors, foreign investors have also joined the market, and it would be unfair to collect tax from foreign investors while leaving domestic investors exempt from tax.
In fact, if deducting 0.1% of transaction value for every transaction, this sum proves to be even lower than the brokerage fee investors have to pay to securities companies, now 0.5% at maximum. Foreign professional investors are still heavily investing in Vietnam, which shows that the current tax policies are suitable.
The principle of tax calculation is imposing on income (the margin after deducting the prime cost and additional expenses from the turnover). How can we calculate the additional expenses?
Investors must show vouchers, for example, the consultancy contracts, the contracts on borrowing money for investment deals. State management authorities will promulgate documents guiding the issue after the law is enacted
Could you please tell us more about the tax collection method?
When investors transfer their shares, securities companies will automatically withhold 0.1% of the total value of the assigned shares. At the year’s end, the earners have to go to taxation agencies to declare the total income and the total tax they have to pay. If the tax sums they have to pay are higher than the sums they temporarily paid, they will have to pay additional sums. Meanwhile, if the tax sums they have to pay are lower than the temporarily paid sums, they will get the tax refund. The method is now being applied for collecting tax from foreign investors.
As for the OTC market, where transactions cannot be controlled well, VAFI has suggested that the taxation bodies will collect 0.2% of the share face value. What would you say about the proposal?
In designing tax policies, there should not be the overly big difference between the policies applied to different subjects. In principle, the tax on OTC securities will be similar with the listing securities. At this moment, it seems to be difficult to collect tax from OTC securities investors. However, the situation will be different in two or three years. The OTC market will also have a watchdog, while public companies will have to register their business, and OTC share transactions will have to go via securities companies.
How will you deal with the opinions and suggestions from experts and the public on the personal income tax bill?
The compilation committee is collecting opinions from the public. On August 15, the opinions will be classified into groups for discussion.
Source: VNE
Some experts said that the suggested 25% tax rate on capital assignment proves to be too high. What is the basis for the compilation committee’s decision that the tax rate should be 25%?
When designing the tariff, we planned to set the same tax rate on the capital assignment and real estate assignment at 25%, to make the tariff transparent and simple. The basis for the decision is the currently applied tax rate of 28% imposed on the earnings from securities investments of institutions and enterprises (individual securities investors now enjoy tax exemption).
The compilation committee thinks that there should not be a too big gap between the tax rates on individuals and institutions, which would prompt tax evasion. In other countries in the region, the tax sums securities investors have to pay may be ½, ¼ or 1/5 of the income from capital assignment. We have considered these cases thoroughly, and decided that the 25% rate would be a suitable rate, not overly high if compared to other countries.
VAFI (Vietnam Association of Financial Investors) has proposed lower tax rates, 5%-10%. What would you say about the suggestion?
As for the income tax, it is impossible to design different tax rates for different investors. We can only impose different tax rates on residential and non-residential investors. As I have said, the too big gap between the rates on individual and institutional investors will encourage institutional investors to evade tax by assuming individuals’ names. This is a taboo in designing tax policies.
In fact, individual investors cannot get big profit as institutional investors can, because individuals do not have much experience in doing business. Do you think that it would be unreasonable to impose the same tax rates on individuals and other subjects?
As for individual investors, tax policies always aim to encourage investment. The tax designed for these investors has never been too high to keep them away from the market.
In the last few years, the state, aiming to stimulate the market, has been applying policies of tax exemption for many subjects. In fact, the collection from securities earnings has just accounted for a small proportion of the state budget collection. However, as the market develops, it would be necessary to amend the policies to make them more suitable to the new circumstances. Besides domestic investors, foreign investors have also joined the market, and it would be unfair to collect tax from foreign investors while leaving domestic investors exempt from tax.
In fact, if deducting 0.1% of transaction value for every transaction, this sum proves to be even lower than the brokerage fee investors have to pay to securities companies, now 0.5% at maximum. Foreign professional investors are still heavily investing in Vietnam, which shows that the current tax policies are suitable.
The principle of tax calculation is imposing on income (the margin after deducting the prime cost and additional expenses from the turnover). How can we calculate the additional expenses?
Investors must show vouchers, for example, the consultancy contracts, the contracts on borrowing money for investment deals. State management authorities will promulgate documents guiding the issue after the law is enacted
Could you please tell us more about the tax collection method?
When investors transfer their shares, securities companies will automatically withhold 0.1% of the total value of the assigned shares. At the year’s end, the earners have to go to taxation agencies to declare the total income and the total tax they have to pay. If the tax sums they have to pay are higher than the sums they temporarily paid, they will have to pay additional sums. Meanwhile, if the tax sums they have to pay are lower than the temporarily paid sums, they will get the tax refund. The method is now being applied for collecting tax from foreign investors.
As for the OTC market, where transactions cannot be controlled well, VAFI has suggested that the taxation bodies will collect 0.2% of the share face value. What would you say about the proposal?
In designing tax policies, there should not be the overly big difference between the policies applied to different subjects. In principle, the tax on OTC securities will be similar with the listing securities. At this moment, it seems to be difficult to collect tax from OTC securities investors. However, the situation will be different in two or three years. The OTC market will also have a watchdog, while public companies will have to register their business, and OTC share transactions will have to go via securities companies.
How will you deal with the opinions and suggestions from experts and the public on the personal income tax bill?
The compilation committee is collecting opinions from the public. On August 15, the opinions will be classified into groups for discussion.
Source: VNE
Wednesday, July 11, 2007
Capital gains tax to hit investors where it hurts
A Ministry of Finance proposal that may impose a 25 per cent tax on income earned through dividends and stock trading may discourage investment in the capital market and ultimately hamper development efforts.
The 25 per cent tax, which will tentatively take affect in January 2009, is too high and would hurt companies’ ability to raise cash for long term investments, says Dinh The Hien, director of the Institution for Informatics and Business (IIB).
"This capital source is very important for Vietnamese companies’ rapid growth and their competitiveness," says Hien.
It is a unilateral and inappropriate proposal based on the market’s strong growth last year and expectations securities investments are a "super profitable business", says Hien.
The capital market is not expected to sustain the unprecedented growth it went through in 2006 and the early part of 2007. As a matter of fact, an increasing number of securities analysts over the past week have argued the bourse may finally be stabilising, particularly after the lackluster performance on the HCM City bourse.
"I think that at present and in the future, investments into the stock market will only generate 15-20 per cent in profit for retail investors, while at the same time they face considerable risks," says Hien.
Analysts suggest that the draft proposal be postponed for the next five to ten years in order to give the securities market more time to develop.
There is also concern for brokerages that the tax will shift investor preferences away from stocks to real estate, gold and bank deposits where returns still seem promising.
Entrepreneurs will potentially get hit twice if the proposal is approved.
"In fact, [the majority] shareholders are also owners who already oppose the 28 per cent tax on corporate earnings," says Hien. "So, is it reasonable if they have to suffer a double tax?"
Deputy Minister of Finance Truong Chi Trung argues companies and executives were not double taxed, and in fact officials were planning to reduce the corporate earnings levy from 28 to 25 per cent to encourage more foreign investment.
General Secretary of the Viet Nam Association of Financial Investors Nguyen Hoang Hai also suggested that policymakers consider decreasing the proposed taxes from 25 to 5-10 per cent.
A lower tax threshold is appropriate given that not everybody makes money on the market. There is little reason to excessively punish investors who are able to turn a profit one year, because securities the next moment could easily take a nose dive, say analysts.
The draft law, though, was only circulated to gauge public opinion, says Trung. The ministry will consider public opinion before completing the draft law and submitting it to the Government for final approval.
Source: VNS
The 25 per cent tax, which will tentatively take affect in January 2009, is too high and would hurt companies’ ability to raise cash for long term investments, says Dinh The Hien, director of the Institution for Informatics and Business (IIB).
"This capital source is very important for Vietnamese companies’ rapid growth and their competitiveness," says Hien.
It is a unilateral and inappropriate proposal based on the market’s strong growth last year and expectations securities investments are a "super profitable business", says Hien.
The capital market is not expected to sustain the unprecedented growth it went through in 2006 and the early part of 2007. As a matter of fact, an increasing number of securities analysts over the past week have argued the bourse may finally be stabilising, particularly after the lackluster performance on the HCM City bourse.
"I think that at present and in the future, investments into the stock market will only generate 15-20 per cent in profit for retail investors, while at the same time they face considerable risks," says Hien.
Analysts suggest that the draft proposal be postponed for the next five to ten years in order to give the securities market more time to develop.
There is also concern for brokerages that the tax will shift investor preferences away from stocks to real estate, gold and bank deposits where returns still seem promising.
Entrepreneurs will potentially get hit twice if the proposal is approved.
"In fact, [the majority] shareholders are also owners who already oppose the 28 per cent tax on corporate earnings," says Hien. "So, is it reasonable if they have to suffer a double tax?"
Deputy Minister of Finance Truong Chi Trung argues companies and executives were not double taxed, and in fact officials were planning to reduce the corporate earnings levy from 28 to 25 per cent to encourage more foreign investment.
General Secretary of the Viet Nam Association of Financial Investors Nguyen Hoang Hai also suggested that policymakers consider decreasing the proposed taxes from 25 to 5-10 per cent.
A lower tax threshold is appropriate given that not everybody makes money on the market. There is little reason to excessively punish investors who are able to turn a profit one year, because securities the next moment could easily take a nose dive, say analysts.
The draft law, though, was only circulated to gauge public opinion, says Trung. The ministry will consider public opinion before completing the draft law and submitting it to the Government for final approval.
Source: VNS
What lies behind the high inflation rate?
The consumer price index (CPI) increased by 5.2% in the first six months of the year, a figure that surprised every one. Head of the Ministry of Finance’s Price Management Department Nguyen Tien Thoa talked about this.
According to official explanations, prices in Vietnam escalated because prices increased all over the world. However, prices did not increase so sharply in other countries which also were affected by oil price increases and animal epidemics. How can you explain this?
I know you want to know why price increases were different in different countries, though the countries were all in the same situation. Firstly, I think the root cause is the weak competitiveness of the national economy. You can see this in the high production costs of Vietnam-made products. It is clear that the high domestic production costs plus the higher input material prices pushed the selling prices up.
Secondly, the measures which have been carried out by Vietnamese enterprises to cope with the difficulties caused by the world’s price fluctuations remain insufficient.
Thirdly, in a national economy like Vietnam, the imports of many key materials are always at very high levels. For example, Vietnam imports 100% of petrol, 60-70% of ingot steel, 90% of materials for drugs. Therefore, Vietnam is heavily affected by the world’s price fluctuations, and domestic prices escalate right when the world’s prices increase.
Other countries seem to find it easier to cope with the difficulties caused by the price hikes (for example, they improve production technologies and try to reduce fuel consumption), while Vietnamese enterprises still find it hard to overcome the difficulties.
I also have to say that other countries have got used to the market pricing system with no subsidies, while Vietnam still maintains the subsidisations of several key product items. Therefore, price increases do not cause special impacts in other countries, while causing shocks in Vietnam as the price increases are bigger in Vietnam than in any other countries.
In the last six months, the central bank has bought $7bil, which means some VND112tril has been put into circulation. How has the move affected the monetary supply? (Total goods and service retail value was VND335tril, or $20.93bil in the first six months of the year)
In the first six months of the year, the foreign investment inflow increased, which has resulted in bigger supply of foreign currencies, putting pressure on the local currency to revaluate against other foreign currencies, while increasing the total means of payments. In the last six months, Vietnam has attracted $5.2bil more in foreign direct investment (FDI), $1.7bil in portfolio investment.
The central bank has put more money into circulation by buying more foreign currencies for reserve, while trying to withdraw cash from circulation by selling SBV bonds. The total sum of money put into circulation since the beginning of the year is equal to 67% of that approved by the Government for the whole of 2007.
The stock market keeps developing, the total value of listing securities has reached VND221,156bil, or $14bil, or 22.7% of 2006’s GDP.
Regarding the total means of payment and credit, an estimate by the central bank showed that by the end of May, the total means of payment had increased by 16.9% over the end of 2006, and by 39.8% over the same period of 2006. The total outstanding loans increased by 15.04% over the end of December 2006, and 33.53% over the same period of 2006.
Two groups of goods and services saw price increases higher than the average levels, construction materials and food. Could you please give more details about the increases of the two categories of goods?
The real estate markets in Hanoi and HCM City saw price fever when prices rose by 20-50%. The prices of fuel, including petrol, also increased twice, by 8.9% and 7.2%, while the prices of gas and steel also saw sharp increases.
Food products saw big price increases due to higher demand and higher export prices, while the supply was shorter due to animal epidemics.
The Government plans to apply a lot of measures in order to curb inflation. In the immediate time, taxes will be cut as a result of global integration with the average reduction of 44%, especially on products which have high tax rates, including paper, wooden products and cars.
In terms of monetary policies, the central bank will maintain the basic interest rate for VND, while requiring higher compulsory reserve ratio, withdrawing money from circulation, thus easing the pressure on prices.
Vietnam began implementing WTO commitments right at the beginning of the year, which has resulted in the reduction of prices of many goods. What can you say about the impact of WTO membership on prices?
You should not think in the one way that WTO membership will only make prices lower. There will be both price decreases and increases, which will depend on market supply and demand. More foreign-made goods will be imported thanks to lower tariffs, which will lead to the price decreases of many goods, but when Vietnam exports more goods, this will make the prices of the export items on the domestic market increase.
The principle that the Government and relevant ministries will observe is to follow the world’s market closely.
Source: VNE
According to official explanations, prices in Vietnam escalated because prices increased all over the world. However, prices did not increase so sharply in other countries which also were affected by oil price increases and animal epidemics. How can you explain this?
I know you want to know why price increases were different in different countries, though the countries were all in the same situation. Firstly, I think the root cause is the weak competitiveness of the national economy. You can see this in the high production costs of Vietnam-made products. It is clear that the high domestic production costs plus the higher input material prices pushed the selling prices up.
Secondly, the measures which have been carried out by Vietnamese enterprises to cope with the difficulties caused by the world’s price fluctuations remain insufficient.
Thirdly, in a national economy like Vietnam, the imports of many key materials are always at very high levels. For example, Vietnam imports 100% of petrol, 60-70% of ingot steel, 90% of materials for drugs. Therefore, Vietnam is heavily affected by the world’s price fluctuations, and domestic prices escalate right when the world’s prices increase.
Other countries seem to find it easier to cope with the difficulties caused by the price hikes (for example, they improve production technologies and try to reduce fuel consumption), while Vietnamese enterprises still find it hard to overcome the difficulties.
I also have to say that other countries have got used to the market pricing system with no subsidies, while Vietnam still maintains the subsidisations of several key product items. Therefore, price increases do not cause special impacts in other countries, while causing shocks in Vietnam as the price increases are bigger in Vietnam than in any other countries.
In the last six months, the central bank has bought $7bil, which means some VND112tril has been put into circulation. How has the move affected the monetary supply? (Total goods and service retail value was VND335tril, or $20.93bil in the first six months of the year)
In the first six months of the year, the foreign investment inflow increased, which has resulted in bigger supply of foreign currencies, putting pressure on the local currency to revaluate against other foreign currencies, while increasing the total means of payments. In the last six months, Vietnam has attracted $5.2bil more in foreign direct investment (FDI), $1.7bil in portfolio investment.
The central bank has put more money into circulation by buying more foreign currencies for reserve, while trying to withdraw cash from circulation by selling SBV bonds. The total sum of money put into circulation since the beginning of the year is equal to 67% of that approved by the Government for the whole of 2007.
The stock market keeps developing, the total value of listing securities has reached VND221,156bil, or $14bil, or 22.7% of 2006’s GDP.
Regarding the total means of payment and credit, an estimate by the central bank showed that by the end of May, the total means of payment had increased by 16.9% over the end of 2006, and by 39.8% over the same period of 2006. The total outstanding loans increased by 15.04% over the end of December 2006, and 33.53% over the same period of 2006.
Two groups of goods and services saw price increases higher than the average levels, construction materials and food. Could you please give more details about the increases of the two categories of goods?
The real estate markets in Hanoi and HCM City saw price fever when prices rose by 20-50%. The prices of fuel, including petrol, also increased twice, by 8.9% and 7.2%, while the prices of gas and steel also saw sharp increases.
Food products saw big price increases due to higher demand and higher export prices, while the supply was shorter due to animal epidemics.
The Government plans to apply a lot of measures in order to curb inflation. In the immediate time, taxes will be cut as a result of global integration with the average reduction of 44%, especially on products which have high tax rates, including paper, wooden products and cars.
In terms of monetary policies, the central bank will maintain the basic interest rate for VND, while requiring higher compulsory reserve ratio, withdrawing money from circulation, thus easing the pressure on prices.
Vietnam began implementing WTO commitments right at the beginning of the year, which has resulted in the reduction of prices of many goods. What can you say about the impact of WTO membership on prices?
You should not think in the one way that WTO membership will only make prices lower. There will be both price decreases and increases, which will depend on market supply and demand. More foreign-made goods will be imported thanks to lower tariffs, which will lead to the price decreases of many goods, but when Vietnam exports more goods, this will make the prices of the export items on the domestic market increase.
The principle that the Government and relevant ministries will observe is to follow the world’s market closely.
Source: VNE
Thursday, July 05, 2007
25% tax on securities investments too high
The plan to impose a tax of 25% on income from securities investments has been facing strong opposition from experts, who say the taxation should be re-considered or it will badly affect the fledgling stock market.
Nguyen Hoang Hai, Secretary General of the Vietnam Association of Financial Investors (VAFI), said that the suggested 25% tax rate proved to be overly high. The taxation body, according to Mr Hai, does not have the necessary legal basis to build up the method to calculate the expenses for the work that creates income from capital assignment deals.
Let’s take the expenses investors have to pay for brokerage as example. Investors can show the bills to prove the expenses, while they do not have regular vouchers if they make transactions on the OTC market. Investors also cannot claim other expenses, including ones for getting information, training, getting loans and travelling as they cannot get bills.
Moreover, taxation agencies will find it difficult to define the selling and purchasing prices in transactions on the OTC market as the trading deals are not carried out through securities companies, and investors do not have transaction accounts at the companies.
According to Mr Hai, other countries in the region, including Hong Kong, Singapore, and Thailand, do not tax securities assignment deals, while China imposes a very low tax rate. As for the official market, it would be better to tax transactions based on the selling prices (for example, 0.05-0.1% of the selling prices). As for the OTC market, as it is difficult to define the purchasing and selling prices, it would be better to base a tax on the face value of securities, and the tax rate should be higher, at 0.5%.
Economist Nguyen Van Tu also shared the same view, saying that the 25% tax rate proved to be unfeasible. In fact, taxation bodies seem to be targeting the investors who became rich rapidly when the market was hot and brought fat profit to investors.
Tran Dinh Thien, Deputy Director of the Vietnam Economics Institute, agreed that a lot of investors got fat profit, but taxation bodies should consider setting tax rates under the normal operation conditions of the market, not under any other special conditions. Moreover, Mr Thien said that tax policies should be built up in a way that helps stimulate the fledgling market.
Dr Nguyen Van Tuyen has asked for the reconsideration of the income tax on the income from dividends and the income from capital contribution profit. Before giving dividends or profit to shareholders or capital contributors, economic institutions have to pay corporate income tax already.
If the income from dividends or profit from capital contributions were still subject to the personal income tax, it would violate the principle of not taxing twice on the same income.
Lawyer Cao Ba Khoat also said that taxing dividends would create an overlap in taxation, or double taxation, since dividends are post-tax income.
Source: VNE
Nguyen Hoang Hai, Secretary General of the Vietnam Association of Financial Investors (VAFI), said that the suggested 25% tax rate proved to be overly high. The taxation body, according to Mr Hai, does not have the necessary legal basis to build up the method to calculate the expenses for the work that creates income from capital assignment deals.
Let’s take the expenses investors have to pay for brokerage as example. Investors can show the bills to prove the expenses, while they do not have regular vouchers if they make transactions on the OTC market. Investors also cannot claim other expenses, including ones for getting information, training, getting loans and travelling as they cannot get bills.
Moreover, taxation agencies will find it difficult to define the selling and purchasing prices in transactions on the OTC market as the trading deals are not carried out through securities companies, and investors do not have transaction accounts at the companies.
According to Mr Hai, other countries in the region, including Hong Kong, Singapore, and Thailand, do not tax securities assignment deals, while China imposes a very low tax rate. As for the official market, it would be better to tax transactions based on the selling prices (for example, 0.05-0.1% of the selling prices). As for the OTC market, as it is difficult to define the purchasing and selling prices, it would be better to base a tax on the face value of securities, and the tax rate should be higher, at 0.5%.
Economist Nguyen Van Tu also shared the same view, saying that the 25% tax rate proved to be unfeasible. In fact, taxation bodies seem to be targeting the investors who became rich rapidly when the market was hot and brought fat profit to investors.
Tran Dinh Thien, Deputy Director of the Vietnam Economics Institute, agreed that a lot of investors got fat profit, but taxation bodies should consider setting tax rates under the normal operation conditions of the market, not under any other special conditions. Moreover, Mr Thien said that tax policies should be built up in a way that helps stimulate the fledgling market.
Dr Nguyen Van Tuyen has asked for the reconsideration of the income tax on the income from dividends and the income from capital contribution profit. Before giving dividends or profit to shareholders or capital contributors, economic institutions have to pay corporate income tax already.
If the income from dividends or profit from capital contributions were still subject to the personal income tax, it would violate the principle of not taxing twice on the same income.
Lawyer Cao Ba Khoat also said that taxing dividends would create an overlap in taxation, or double taxation, since dividends are post-tax income.
Source: VNE
Thursday, June 28, 2007
Corporate income tax expected to decrease
Deputy Minister of Finance Truong Chi Trung said that the Finance Ministry was considering reducing the corporate income tax to further attract foreign investment.
The reduction may be performed this year and could drop to the level of some countries in the region, from 28% to 25%.
At a meeting on the draft Law on Personal Income Tax on June 26, Deputy Minister Truong Chi Trung said that many investors had complained that Vietnam’s corporate income tax was quite high compared to the common level in the world and ASEAN countries (around 20-25%).
If Vietnam maintains the current tax rate the country will have difficulty encouraging production and business as well as drawing foreign investment into the country.
“That’s why we are considering adjusting the tax rate to be suitable to the development situation of Vietnam,” Mr Trung said.
Source: VNE
The reduction may be performed this year and could drop to the level of some countries in the region, from 28% to 25%.
At a meeting on the draft Law on Personal Income Tax on June 26, Deputy Minister Truong Chi Trung said that many investors had complained that Vietnam’s corporate income tax was quite high compared to the common level in the world and ASEAN countries (around 20-25%).
If Vietnam maintains the current tax rate the country will have difficulty encouraging production and business as well as drawing foreign investment into the country.
“That’s why we are considering adjusting the tax rate to be suitable to the development situation of Vietnam,” Mr Trung said.
Source: VNE
Friday, June 01, 2007
Tariff on import petrol announced
The Ministry of Finance (MoF) has announced the tariff on petrol imports, which consists of five tax rates, from 0% to 20%, to be applied at different times, depending on the world’s prices.
The tax rate of 0% will be applied if the world’s A92 petrol average import price is over $89/barrel. The rate of 5% will be imposed if the world’s price hovers between $83 and $89 per barrel. The rates of 10%, 15% and 20% will be imposed when the world’s prices are low, at $78-83, $72-78, and below $72 per barrel, respectively.
According to Deputy Minister of Finance Truong Chi Trung, petrol importers can refer to the tariff to make their business plans. Meanwhile, customers also can use the tariff to find out if petrol distributors are selling petrol dear.
With the tariff, petrol importers can easily calculate the import tax they have to pay for imports. This will also help management authorities to be more flexible with their management policies.
In addition to the tariff, MoF will also announce the formula to calculate the petrol price. Customers can apply the calculation method to know if the selling prices are reasonable. The main factors to calculate the retail price include import price, plus taxes (import tax, luxury tax, VAT, VND/US$ exchange rate, traffic toll at VND500/litre), management and distribution expenses, and some other kinds of fees.
In the latest news, MoF has decided to lower the import tax on petrol from 5% to 0%, applied to customs declarations as of May 30. The move aims to help ease the burden on petrol importers caused by the world’s petrol price increase, and to prevent importers from raising retail prices.
Key petrol importers said that before the decision was made to lower tax, they suffered the loss of VND500-800/litre.
Analysts say that the pressure to raise the retail price has been not been as hard as some days ago, when petrol importers sought to raise the selling price. On May 31 in the morning, the light sweet oil price in New York (delivery in July) was $63.30/barrel, a slight increase of UScent15.
In Singapore, A92 is being offered at $87.38/barrel, just $3/barrel higher than that seen on May 8, when the price was raised from VND11,000 to VND11,800/litre.
Source: VNE
The tax rate of 0% will be applied if the world’s A92 petrol average import price is over $89/barrel. The rate of 5% will be imposed if the world’s price hovers between $83 and $89 per barrel. The rates of 10%, 15% and 20% will be imposed when the world’s prices are low, at $78-83, $72-78, and below $72 per barrel, respectively.
According to Deputy Minister of Finance Truong Chi Trung, petrol importers can refer to the tariff to make their business plans. Meanwhile, customers also can use the tariff to find out if petrol distributors are selling petrol dear.
With the tariff, petrol importers can easily calculate the import tax they have to pay for imports. This will also help management authorities to be more flexible with their management policies.
In addition to the tariff, MoF will also announce the formula to calculate the petrol price. Customers can apply the calculation method to know if the selling prices are reasonable. The main factors to calculate the retail price include import price, plus taxes (import tax, luxury tax, VAT, VND/US$ exchange rate, traffic toll at VND500/litre), management and distribution expenses, and some other kinds of fees.
In the latest news, MoF has decided to lower the import tax on petrol from 5% to 0%, applied to customs declarations as of May 30. The move aims to help ease the burden on petrol importers caused by the world’s petrol price increase, and to prevent importers from raising retail prices.
Key petrol importers said that before the decision was made to lower tax, they suffered the loss of VND500-800/litre.
Analysts say that the pressure to raise the retail price has been not been as hard as some days ago, when petrol importers sought to raise the selling price. On May 31 in the morning, the light sweet oil price in New York (delivery in July) was $63.30/barrel, a slight increase of UScent15.
In Singapore, A92 is being offered at $87.38/barrel, just $3/barrel higher than that seen on May 8, when the price was raised from VND11,000 to VND11,800/litre.
Source: VNE
Wednesday, May 30, 2007
Banks want to trade gold via accounts
Commercial banks are trying to persuade the State Bank of Vietnam to allow them to make payments for gold trading in the domestic market via accounts instead of paying in cash and real gold as at present.
Gold trading has become one of the most lucrative businesses, which explains why more and more commercial banks are getting involved in this kind of business.
Banks now want to make payments for trading deals through accounts instead of cash, and trade virtual gold (gold on account) instead of real gold. The banks say this will help prevent risks for both sellers and buyers, while the State can control the money flow on the gold market.
Currently, gold trading deals all are being carried out in material gold and payments are not made through banks; therefore, no management authorities can control the trading volume. Gold traders may take unfair advantage of the loopholes in the law to evade tax, while the profit from gold trading proves to be very big.
Moreover, transactions with actual gold prove to be inconvenient for both sellers and buyers, and can lead to risks during the transportation process.
The Saigon Jewellery Company (SJC) has been allowed by the central bank to trade gold with foreign partners through offshore accounts. However, in Vietnam, SJC, which has its head office just several tens of metres from Vietcombank, cannot make payments through accounts when dealing with clients.
“It is illogical that gold is considered a kind of currency, but transactions via accounts are not allowed,” an official said.
SJC said that the company might apply to open transaction accounts at two banks, ACB and Eximbank, which will serve the company’s gold trading. However, one of the two banks said that it had not got permission from the central bank to accept SJC’s account.
Commercial banks insist that paying through accounts will benefit both banks and State management authorities. This will provide a tool which can ensure safety in trading deals, while the central bank can easily control the money flow.
However, financiers have warned that private gold trading companies may protest the plan to make payments via accounts. If the scheme on making payments via accounts is applied, the companies will have no way to evade tax.
Source: VNE
Gold trading has become one of the most lucrative businesses, which explains why more and more commercial banks are getting involved in this kind of business.
Banks now want to make payments for trading deals through accounts instead of cash, and trade virtual gold (gold on account) instead of real gold. The banks say this will help prevent risks for both sellers and buyers, while the State can control the money flow on the gold market.
Currently, gold trading deals all are being carried out in material gold and payments are not made through banks; therefore, no management authorities can control the trading volume. Gold traders may take unfair advantage of the loopholes in the law to evade tax, while the profit from gold trading proves to be very big.
Moreover, transactions with actual gold prove to be inconvenient for both sellers and buyers, and can lead to risks during the transportation process.
The Saigon Jewellery Company (SJC) has been allowed by the central bank to trade gold with foreign partners through offshore accounts. However, in Vietnam, SJC, which has its head office just several tens of metres from Vietcombank, cannot make payments through accounts when dealing with clients.
“It is illogical that gold is considered a kind of currency, but transactions via accounts are not allowed,” an official said.
SJC said that the company might apply to open transaction accounts at two banks, ACB and Eximbank, which will serve the company’s gold trading. However, one of the two banks said that it had not got permission from the central bank to accept SJC’s account.
Commercial banks insist that paying through accounts will benefit both banks and State management authorities. This will provide a tool which can ensure safety in trading deals, while the central bank can easily control the money flow.
However, financiers have warned that private gold trading companies may protest the plan to make payments via accounts. If the scheme on making payments via accounts is applied, the companies will have no way to evade tax.
Source: VNE
Tuesday, May 29, 2007
Economist and entrepreneurs name shortcomings
Poor tax and land policies are stymieing the growth of private enterprises in Vietnam, a conference in Ho Chi Minh City heard Monday.
At the meeting attended by economists and entrepreneurs, Huynh Thi Kim Huong, director of the city-based ISC, a commodities distributor, said the opaque tax policies caused many difficulties for companies.
Her company, for instance, paid 3 percent, 10 percent, and 20 percent import tax on shuttlecock but on an ad hoc basis; there were no fixed tariffs.
Initially ISC had paid 5 percent. Later the rate had been raised to 10 percent without any explanation from customs. If her company contested the arbitrariness, it was slapped with a 20 percent rate.
The opaque tax regime enabled customs officials to get bribes.
Dinh Van An, head of the Central Economic Management Research Institute, concurred saying the tax policies were vague.
There were 14 kinds of tax-deductible fees but they did not include commission and brokerage, causing confusion.
The government intervened too much in businesses’ activities: For instance, salaries paid by the private sector could not exceed those paid by state firms in the same sector.
It was necessary to have an open financial mechanism to provide private firms more rights in determining their financial activities.
Chen Li Hsun, chairman of Taiwanese-owned Full Power Joint Stock Company, said inappropriate land policies caused problems for real estate firms.
Official rates set by the government were too much at variance with market rates.
Another problem was that state agencies wanted firms to submit firm proposals before fixing the land price. But investors needed to know the price to finalize their plans.
Tran Ngoc Lan, deputy head of the National Committee for Ideology and Culture in the south, admitted that non-state firms were yet to get tax, finance, and land use privileges because to red tape.
Foreign experts said commercial banks ignored private firms, particularly small and medium ones, since they mostly targeted big companies.
Source: VNA
At the meeting attended by economists and entrepreneurs, Huynh Thi Kim Huong, director of the city-based ISC, a commodities distributor, said the opaque tax policies caused many difficulties for companies.
Her company, for instance, paid 3 percent, 10 percent, and 20 percent import tax on shuttlecock but on an ad hoc basis; there were no fixed tariffs.
Initially ISC had paid 5 percent. Later the rate had been raised to 10 percent without any explanation from customs. If her company contested the arbitrariness, it was slapped with a 20 percent rate.
The opaque tax regime enabled customs officials to get bribes.
Dinh Van An, head of the Central Economic Management Research Institute, concurred saying the tax policies were vague.
There were 14 kinds of tax-deductible fees but they did not include commission and brokerage, causing confusion.
The government intervened too much in businesses’ activities: For instance, salaries paid by the private sector could not exceed those paid by state firms in the same sector.
It was necessary to have an open financial mechanism to provide private firms more rights in determining their financial activities.
Chen Li Hsun, chairman of Taiwanese-owned Full Power Joint Stock Company, said inappropriate land policies caused problems for real estate firms.
Official rates set by the government were too much at variance with market rates.
Another problem was that state agencies wanted firms to submit firm proposals before fixing the land price. But investors needed to know the price to finalize their plans.
Tran Ngoc Lan, deputy head of the National Committee for Ideology and Culture in the south, admitted that non-state firms were yet to get tax, finance, and land use privileges because to red tape.
Foreign experts said commercial banks ignored private firms, particularly small and medium ones, since they mostly targeted big companies.
Source: VNA
Wednesday, May 16, 2007
Earnings from securities trading will be taxed
The bill on personal income tax (PIT) will be open for public referendum in June. Under the bill, earnings from securities trading will be taxed, while interest from bank deposits will still not be the subject to PIT.
The attempt to tax the earnings from securities trading once faced strong opposition from the public. However, the situation has become quite different as the stock market is booming and many investors have made fat profit.
Deputy Minister of Finance Truong Chi Trung said that it proves to be the right time to tax securities trading. Some experts have even said that the proposed tax rates on securities earnings were relatively low.
Mr Trung said that there would be three kinds of securities earnings to be taxed. First, earnings from dividends, or yearly profit from securities will be taxed 5%. Second, investors will have to pay an assignment tax when transferring shares. Third, Vietnam will collect taxes from non-resident foreign investors.
When asked if Vietnam will tax bonus shares (shares issued by listing companies to existing shareholders as a bonus), Mr Trung said that bonus shares were a newly arising problem. The General Department of Taxation will compile documents about the issue.
Taxing interest from bank deposits has been the most ‘sensitive’ problem in the bill and has raised a lot of arguments. MoF has decided that in the first period of the law’s implementation, bank deposit interests will be exempted from PIT. MoF will consider the living standards and average income of people later to decide whether to tax earnings from bank deposits.
Mr Trung said that all the problems were being discussed and the bill’s compilation would be wrapped up after the bill was open for public opinions in June. The bill on PIT is scheduled to be submitted for the National Assembly for consideration by the end of this year.
Source: VNE
The attempt to tax the earnings from securities trading once faced strong opposition from the public. However, the situation has become quite different as the stock market is booming and many investors have made fat profit.
Deputy Minister of Finance Truong Chi Trung said that it proves to be the right time to tax securities trading. Some experts have even said that the proposed tax rates on securities earnings were relatively low.
Mr Trung said that there would be three kinds of securities earnings to be taxed. First, earnings from dividends, or yearly profit from securities will be taxed 5%. Second, investors will have to pay an assignment tax when transferring shares. Third, Vietnam will collect taxes from non-resident foreign investors.
When asked if Vietnam will tax bonus shares (shares issued by listing companies to existing shareholders as a bonus), Mr Trung said that bonus shares were a newly arising problem. The General Department of Taxation will compile documents about the issue.
Taxing interest from bank deposits has been the most ‘sensitive’ problem in the bill and has raised a lot of arguments. MoF has decided that in the first period of the law’s implementation, bank deposit interests will be exempted from PIT. MoF will consider the living standards and average income of people later to decide whether to tax earnings from bank deposits.
Mr Trung said that all the problems were being discussed and the bill’s compilation would be wrapped up after the bill was open for public opinions in June. The bill on PIT is scheduled to be submitted for the National Assembly for consideration by the end of this year.
Source: VNE
Tuesday, May 08, 2007
WTO brings more imports than exports
Imports have increased by 50% while exports have seen a modest increase of 18% in the three months since Vietnam joined the WTO, according to Nguyen Van Lich from the Trade Research Institute.
Mr Lich said that the trade gap in the last few years was 15% – within the safety line. However, as Vietnam has joined the WTO and had to cut tariffs, paving the way for more imports into Vietnam, the trade gap is likely to increase sharply if Vietnam cannot find ways to boost exports.
In principle, the trade balance will improve thanks to higher exports to be brought about by the expanded export markets during international economic integration. However, this will not become reality if Vietnam-made products are not competitive and Vietnamese enterprises cannot find ways to reduce raw material exports and increase value added products.
According to the Ministry of Trade (MoT), import turnover in the first quarter of the year reached $11.79bil, an increase of 33.6% over the same period last year. With the import increases, the excess of imports over exports has increased to VND1.316bil, or 12.5% of the total export turnover in the first quarter, and 28% of the 2007’s forecast trade gap at $4.66bil. This proves to be a worrying sign, as Vietnam saw a trade surplus in the first quarter of 2006.
According to MoT, the increase of $2.97bil worth of import turnover in the first quarter of 2007 over the first quarter of 2006 included $889mil worth of machinery and equipment imports. The biggest import deal was the import of three A321s worth $306mil.
Statistics show that the import items which saw the biggest import turnover were all input materials for domestic production, such as steel, ingot steel, fibre and wood materials. Meanwhile, consumer product imports did not see a sharp increase.
Therefore, while experts see the big trade gap of the first quarter of the year a worrying sign, MoT does not think this way, saying that the trade gap mainly served investment and local production.
The ministry has stressed that the excess of imports over exports should not be seen as the result of the market opening and the implementation of the tax cuts under WTO commitments. The increased trade gap is the indispensable result of increased domestic investment and production as Vietnam has joined the WTO.
Source: VNE
Mr Lich said that the trade gap in the last few years was 15% – within the safety line. However, as Vietnam has joined the WTO and had to cut tariffs, paving the way for more imports into Vietnam, the trade gap is likely to increase sharply if Vietnam cannot find ways to boost exports.
In principle, the trade balance will improve thanks to higher exports to be brought about by the expanded export markets during international economic integration. However, this will not become reality if Vietnam-made products are not competitive and Vietnamese enterprises cannot find ways to reduce raw material exports and increase value added products.
According to the Ministry of Trade (MoT), import turnover in the first quarter of the year reached $11.79bil, an increase of 33.6% over the same period last year. With the import increases, the excess of imports over exports has increased to VND1.316bil, or 12.5% of the total export turnover in the first quarter, and 28% of the 2007’s forecast trade gap at $4.66bil. This proves to be a worrying sign, as Vietnam saw a trade surplus in the first quarter of 2006.
According to MoT, the increase of $2.97bil worth of import turnover in the first quarter of 2007 over the first quarter of 2006 included $889mil worth of machinery and equipment imports. The biggest import deal was the import of three A321s worth $306mil.
Statistics show that the import items which saw the biggest import turnover were all input materials for domestic production, such as steel, ingot steel, fibre and wood materials. Meanwhile, consumer product imports did not see a sharp increase.
Therefore, while experts see the big trade gap of the first quarter of the year a worrying sign, MoT does not think this way, saying that the trade gap mainly served investment and local production.
The ministry has stressed that the excess of imports over exports should not be seen as the result of the market opening and the implementation of the tax cuts under WTO commitments. The increased trade gap is the indispensable result of increased domestic investment and production as Vietnam has joined the WTO.
Source: VNE
Tax revenues below expectations
State tax revenues in the first quarter of the year fell below expectations, reaching 86% of the target set for the quarter, according to the General Department of Taxation.
The department has targeted to collect VND200 trillion (US$12.4 billion) in taxes this year, of which VND150 trillion ($9.3 billion) would come from domestic business taxes. However, tax collections in the first three months were only VND42 trillion ($2.6 billion), or 21% of the year’s target.
The shortfall was largely attributable to increased business costs, rising costs of energy, raw materials and equipment, which ate into corporate profits by causing an overall rise in input costs nationwide of VND1.3 trillion (nearly $81 million). As a consequence, corporate income tax collections were off VND370 billion ($23 million).
In early March, petrol prices went up VND900 per litre, raising costs for goods and services such as transportation.
Industrial sectors dependent on coal were greeted with costs for coal 20% higher than last year’s, and costs for thermoelectric generation grew VND730 billion ($45 million).
The higher costs of transportation, coal and electricity drove up the costs of steel, iron and fertiliser accordingly.
The tax deparment calculated that recent upswings in the prices of many goods would raise industrial input costs by VND5.2 trillion ($324 million) for the year.
Meanwhile, the prices of some consumer goods such as household electronics, appliances and motorbikes fell under the competitive pressures of international integration, causing a further reduction in tax collections estimated at VND100 billion ($6.2 million).
In particular, motorbike prices fell an average of VND348,000 ($22) generating a loss in tax revenues of VND68 billion ($4.2 million).
Source: VNS
The department has targeted to collect VND200 trillion (US$12.4 billion) in taxes this year, of which VND150 trillion ($9.3 billion) would come from domestic business taxes. However, tax collections in the first three months were only VND42 trillion ($2.6 billion), or 21% of the year’s target.
The shortfall was largely attributable to increased business costs, rising costs of energy, raw materials and equipment, which ate into corporate profits by causing an overall rise in input costs nationwide of VND1.3 trillion (nearly $81 million). As a consequence, corporate income tax collections were off VND370 billion ($23 million).
In early March, petrol prices went up VND900 per litre, raising costs for goods and services such as transportation.
Industrial sectors dependent on coal were greeted with costs for coal 20% higher than last year’s, and costs for thermoelectric generation grew VND730 billion ($45 million).
The higher costs of transportation, coal and electricity drove up the costs of steel, iron and fertiliser accordingly.
The tax deparment calculated that recent upswings in the prices of many goods would raise industrial input costs by VND5.2 trillion ($324 million) for the year.
Meanwhile, the prices of some consumer goods such as household electronics, appliances and motorbikes fell under the competitive pressures of international integration, causing a further reduction in tax collections estimated at VND100 billion ($6.2 million).
In particular, motorbike prices fell an average of VND348,000 ($22) generating a loss in tax revenues of VND68 billion ($4.2 million).
Source: VNS
Wednesday, April 25, 2007
Trade deficit persists as imports surge 32%
The nation’s import growth rate during the first four months of the year was much higher than the growth of exports, leading to a growing trade deficit, according to the General Statistic Office.
The first four months reached an export turnover of US$14.5 billion, an annual increase of 22 per cent, the Office said. Of which, the foreign invested sector recorded $8.1 billion in export turnover, and the domestic sector made $6.42 billion, a significant increase of nearly 28 per cent.
Of the key export products, crude oil continued earning the highest export turnover of $2.36 billion although this product has decreased year-on-year in both quality and value.
Garments, despite the difficulties in the US market which accounts for as much as 50 per cent of the total export value, kept its stable growth rate of 31.7 per cent with turnover of $2.2 billion.
The domestic garment industry is fighting against a monitoring system set up by the US Department of Commerce, which may severely affect Vietnamese garment exports in the next months.
Footwear ranked third in export turnover with $1.2 billion, an annual increase of 11 per cent. The footwear sector is becoming more and more competitive due to the significant tax decreases for input products brought about by the nation’s WTO membership.
Seafood, one of the products most expected to record a high export turnover increase in 2007, has export turnover of $1.04 billion, a year-on-year increase of 20.4 per cent.
Coffee recorded the highest growth rate of 134.8 per cent thanks to high prices in contracts from the September 2006 to March 2007 crop.
The nation’s four biggest exporting markets now are the EU, the US, Japan and China, of which the US market imported more than $2 billion from Viet Nam with the main imported products being garments, footwear and wood products.
Import marked a huge year-on-year increase of 32.8 per cent with turnover of $16.8 billion. Of which, the domestic sector imported $10.7 billion, an increase of 35.3 per cent and the foreign invested sector imported $6.1 billion, an increase of 28.7 per cent.
The high import growth rate is attributed to several factors, according to Vo Tri Thanh from the Central Institute for Economic Management.
They include the increase in foreign investment in Viet Nam, the high growth rate in GDP and the stable exchange rate of dong against theUS dollar.
Importation of products used in production accounted for a large proportion of the trade deficit, including machinery ($2.9 billion, an annual increase of 52.7 per cent), petroleum (more than $2 billion), and raw materials for the construction industry.
The high growth rate in import turnover has brought a huge increase of 72 per cent in the nation’s trade deficit.
Thanh said that the increase in the trade deficit, up to now, is not worrying as Viet Nam still has a surplus in the balance of trade. The increase is suitable with the high growth rate of the country, he said.
Source: VNS
The first four months reached an export turnover of US$14.5 billion, an annual increase of 22 per cent, the Office said. Of which, the foreign invested sector recorded $8.1 billion in export turnover, and the domestic sector made $6.42 billion, a significant increase of nearly 28 per cent.
Of the key export products, crude oil continued earning the highest export turnover of $2.36 billion although this product has decreased year-on-year in both quality and value.
Garments, despite the difficulties in the US market which accounts for as much as 50 per cent of the total export value, kept its stable growth rate of 31.7 per cent with turnover of $2.2 billion.
The domestic garment industry is fighting against a monitoring system set up by the US Department of Commerce, which may severely affect Vietnamese garment exports in the next months.
Footwear ranked third in export turnover with $1.2 billion, an annual increase of 11 per cent. The footwear sector is becoming more and more competitive due to the significant tax decreases for input products brought about by the nation’s WTO membership.
Seafood, one of the products most expected to record a high export turnover increase in 2007, has export turnover of $1.04 billion, a year-on-year increase of 20.4 per cent.
Coffee recorded the highest growth rate of 134.8 per cent thanks to high prices in contracts from the September 2006 to March 2007 crop.
The nation’s four biggest exporting markets now are the EU, the US, Japan and China, of which the US market imported more than $2 billion from Viet Nam with the main imported products being garments, footwear and wood products.
Import marked a huge year-on-year increase of 32.8 per cent with turnover of $16.8 billion. Of which, the domestic sector imported $10.7 billion, an increase of 35.3 per cent and the foreign invested sector imported $6.1 billion, an increase of 28.7 per cent.
The high import growth rate is attributed to several factors, according to Vo Tri Thanh from the Central Institute for Economic Management.
They include the increase in foreign investment in Viet Nam, the high growth rate in GDP and the stable exchange rate of dong against theUS dollar.
Importation of products used in production accounted for a large proportion of the trade deficit, including machinery ($2.9 billion, an annual increase of 52.7 per cent), petroleum (more than $2 billion), and raw materials for the construction industry.
The high growth rate in import turnover has brought a huge increase of 72 per cent in the nation’s trade deficit.
Thanh said that the increase in the trade deficit, up to now, is not worrying as Viet Nam still has a surplus in the balance of trade. The increase is suitable with the high growth rate of the country, he said.
Source: VNS
Tuesday, April 24, 2007
Petrol price to be kept under 12'000 Dong
Minister of Trade Truong Dinh Tuyen said late last week during a press conference and online chat with the public that the petrol price would be kept under VND12,000 per litre in 2007.
The petrol price in several neighbouring countries has escalated to VND14-15,000 per litre. However, Mr Tuyen said that the levels cannot be applied for Vietnam, as Vietnamese people still cannot afford the levels. If the world’s oil price increases further to overly high levels, the State will reduce the import tax to 0% to help petrol importers minimise losses.
Under newly promulgated Decree No 55, oil and petrol trading companies have the right to define selling prices themselves. Mr Tuyen said that if oil and petrol trading companies still incurred losses even though the State imposed 0% on imports, the Government might apply the previously applied scheme, under which the Government determined selling prices.
“We cannot predict everything. In case of emergency, we have to use emergency measures,” Mr Tuyen said.
The domestic petrol price is now lower than the world’s average price level, which makes people think that once Decree 55 becomes effective, and allows distributors to define the selling prices themselves, the petrol price will increase promptly. However, Mr Tuyen has denied the scenario.
“In principle, enterprises have the right to define selling prices after May 1. However, no enterprise has registered to raise its selling prices so far,” Mr Tuyen said.
He said that enterprises would consider many factors, including speculation and the capability of incurring losses.
“If I were the director general of Petrolimex, I would not raise the selling prices soon after the decree becomes effective, as I hate speculation,” Mr Tuyen said. If enterprises intend to raise selling prices, their sales agents will know in advance and they could speculate to make profit: i.e. the profit of enterprises would flow to sales agents.
Deputy Director General of Petrolimex Bui Ngoc Bao said that the world’s oil price was decreasing, so Petrolimex would keep close watch over the world’s price for some time more before making decisions about prices.
However, he said that enterprises would develop their own business plans, and as they had been losing money for two months they would likely raise selling prices.
Mr Tuyen stressed that giving enterprises the right to define petrol prices did not mean that the State would float the market. He said that the State would still keep control over the market and petrol prices.
Oil and petrol trading companies must register price adjustments with relevant ministries, and if it finds that the price adjustment is not suitable, the ministries will ask the companies to stop their plans.
The petrol prices may go up and down, but the price increases must not exceed the price increase level of 7% set by the National Assembly.
Mr Tuyen has also announced the State would gradually reduce subsidies on diesel and mazut. It is estimated that by the end of this year, mazut oil will be priced based on the supply and demand basis, while a similar scheme for diesel will be applied in early 2008.
Source: VNE
The petrol price in several neighbouring countries has escalated to VND14-15,000 per litre. However, Mr Tuyen said that the levels cannot be applied for Vietnam, as Vietnamese people still cannot afford the levels. If the world’s oil price increases further to overly high levels, the State will reduce the import tax to 0% to help petrol importers minimise losses.
Under newly promulgated Decree No 55, oil and petrol trading companies have the right to define selling prices themselves. Mr Tuyen said that if oil and petrol trading companies still incurred losses even though the State imposed 0% on imports, the Government might apply the previously applied scheme, under which the Government determined selling prices.
“We cannot predict everything. In case of emergency, we have to use emergency measures,” Mr Tuyen said.
The domestic petrol price is now lower than the world’s average price level, which makes people think that once Decree 55 becomes effective, and allows distributors to define the selling prices themselves, the petrol price will increase promptly. However, Mr Tuyen has denied the scenario.
“In principle, enterprises have the right to define selling prices after May 1. However, no enterprise has registered to raise its selling prices so far,” Mr Tuyen said.
He said that enterprises would consider many factors, including speculation and the capability of incurring losses.
“If I were the director general of Petrolimex, I would not raise the selling prices soon after the decree becomes effective, as I hate speculation,” Mr Tuyen said. If enterprises intend to raise selling prices, their sales agents will know in advance and they could speculate to make profit: i.e. the profit of enterprises would flow to sales agents.
Deputy Director General of Petrolimex Bui Ngoc Bao said that the world’s oil price was decreasing, so Petrolimex would keep close watch over the world’s price for some time more before making decisions about prices.
However, he said that enterprises would develop their own business plans, and as they had been losing money for two months they would likely raise selling prices.
Mr Tuyen stressed that giving enterprises the right to define petrol prices did not mean that the State would float the market. He said that the State would still keep control over the market and petrol prices.
Oil and petrol trading companies must register price adjustments with relevant ministries, and if it finds that the price adjustment is not suitable, the ministries will ask the companies to stop their plans.
The petrol prices may go up and down, but the price increases must not exceed the price increase level of 7% set by the National Assembly.
Mr Tuyen has also announced the State would gradually reduce subsidies on diesel and mazut. It is estimated that by the end of this year, mazut oil will be priced based on the supply and demand basis, while a similar scheme for diesel will be applied in early 2008.
Source: VNE
Tuesday, April 17, 2007
Administrative procedures still problems
More than three months since Vietnam officially realised its WTO commitments, the worries of companies about unofficial costs and internal barriers for business still exist.
A recent survey by the Institute for Legal Sciences of the Ministry of Justice reveals that nearly 98% of interviewed enterprises said that the state should continue speeding up administrative reforms.
Two-thirds of them complained that red-tape in land was the most troublesome, followed by formalities in construction licencing (43.3%) and tax (39.5%).
The Hanoi Commercial and Industrial Association has recently made public its survey, in which 89% of interviewed companies said that they still negotiated and went through taxmen though Hanoi initiated the model in which companies declare, pay and take responsibility for taxes themselves on January 1, 2007. Most companies asked for changes in tax regulations.
Many economic and judicial experts expressed their worry about slow administrative reforms at a workshop on administrative and enterprise reforms held in HCM City last Saturday.
Director of the Trade Information Centre under the Ministry of Trade, Pham Tat Thang, recognised that the state had created a good environment for Vietnamese companies and their products to go to the world market in a new position. The local market is open but still retains its stability and helps local companies to raise their competitiveness.
However, according to Mr Thang, looking at the competitiveness between governments, particularly in national administrative reforms, Vietnam has done little compared to the demand of the time and the expectation of businessmen and Vietnamese people.
“When issuing regulations, many ministries still want to intensify their power, not do this for the interests of businesses and the people,” Mr Thang emphasised.
To establish a company, investors still have to go through three ministries, five stages, which take them at least 35 days and over VND3 million. Many rational petitions of businesses are still being considered.
Vice Chairperson of the Institute for Legal Sciences Le Hong Hanh said that the biggest hindrance of businesses was conditional business and licences.
Research by the Vietnam Chamber of Commerce and Industry (VCCI) shows that of 37 types of licences, five don’t have enough and 19 see problems associated with legal foundation.
“This proves that some sectors have created supplementary power for themselves,” Ms Hanh said.
Even when a business wants to go bankrupt, it still has to fulfill a lot of formalities.
Source: VNN
A recent survey by the Institute for Legal Sciences of the Ministry of Justice reveals that nearly 98% of interviewed enterprises said that the state should continue speeding up administrative reforms.
Two-thirds of them complained that red-tape in land was the most troublesome, followed by formalities in construction licencing (43.3%) and tax (39.5%).
The Hanoi Commercial and Industrial Association has recently made public its survey, in which 89% of interviewed companies said that they still negotiated and went through taxmen though Hanoi initiated the model in which companies declare, pay and take responsibility for taxes themselves on January 1, 2007. Most companies asked for changes in tax regulations.
Many economic and judicial experts expressed their worry about slow administrative reforms at a workshop on administrative and enterprise reforms held in HCM City last Saturday.
Director of the Trade Information Centre under the Ministry of Trade, Pham Tat Thang, recognised that the state had created a good environment for Vietnamese companies and their products to go to the world market in a new position. The local market is open but still retains its stability and helps local companies to raise their competitiveness.
However, according to Mr Thang, looking at the competitiveness between governments, particularly in national administrative reforms, Vietnam has done little compared to the demand of the time and the expectation of businessmen and Vietnamese people.
“When issuing regulations, many ministries still want to intensify their power, not do this for the interests of businesses and the people,” Mr Thang emphasised.
To establish a company, investors still have to go through three ministries, five stages, which take them at least 35 days and over VND3 million. Many rational petitions of businesses are still being considered.
Vice Chairperson of the Institute for Legal Sciences Le Hong Hanh said that the biggest hindrance of businesses was conditional business and licences.
Research by the Vietnam Chamber of Commerce and Industry (VCCI) shows that of 37 types of licences, five don’t have enough and 19 see problems associated with legal foundation.
“This proves that some sectors have created supplementary power for themselves,” Ms Hanh said.
Even when a business wants to go bankrupt, it still has to fulfill a lot of formalities.
Source: VNN
Tuesday, March 20, 2007
Morgan Stanley forming Vietnam securities JV
Wall Street's Morgan Stanley said Monday it is forming a securities joint venture with Vietnam's State Capital Investment Corp., tapping a booming market that is expected to see a wave of equitizations.
The Hanoi-based joint venture, to be named SCIC Morgan Stanley Securities, will provide investment banking products such as M&A advisory and capital markets underwriting, equity and debt sales and trading, as well as research.
The venture will apply for domestic licenses and expects to begin operations in the fourth quarter.
The country's benchmark stock index jumped 144.5% in 2006 and is up more than 50% so far this year, powered in part by an influx of foreign funds chasing economic growth of 8-plus% and a population of 84 million with burgeoning spending power.
Global investment banks have been circling Vietnam in hopes of taking part in the country's surging capital markets activity. Last month, Credit Suisse and Deutsche Bank were chosen to advise as consultants to two Vietnamese banks on their equitizations this year.
Analysts expect strong growth of Vietnam's securities market over the next two years, thanks to substantial inflows of foreign direct and portfolio investment following the country's accession to the World Trade Organization (WTO).
The number of listed companies on the Ho Chi Minh City Securities Trading Center and Hanoi
Securities Trading Center surged to a combined 193 from 32 in 2006.
The total market capitalization of the two bourses rose 20 fold year-on-year to reach US$14 billion, or 22.7% of the country's GDP in 2006.
The State Securities Commission expects the stock market capitalization to jump to 30 to 40% of GDP by 2010.
State-owned SCIC, a strategic investment arm of the government of Vietnam, was created in mid-2005 to take capital ownership of the country's 5,000-plus state-run enterprises, which accounted for about 70% of the country's tax revenues.
SCIC can raise funds through issuing bonds and fund investment certificates. It is authorized to make direct and indirect investments domestically or abroad in any form or sectors.
Morgan Stanley will appoint the joint venture's chief executive, a source familiar with the tie-up said, while SCIC will name the firm's chairman. Both companies, along with staff, will hold equity stakes in the combined firm.
Source: Thanh Nien
The Hanoi-based joint venture, to be named SCIC Morgan Stanley Securities, will provide investment banking products such as M&A advisory and capital markets underwriting, equity and debt sales and trading, as well as research.
The venture will apply for domestic licenses and expects to begin operations in the fourth quarter.
The country's benchmark stock index jumped 144.5% in 2006 and is up more than 50% so far this year, powered in part by an influx of foreign funds chasing economic growth of 8-plus% and a population of 84 million with burgeoning spending power.
Global investment banks have been circling Vietnam in hopes of taking part in the country's surging capital markets activity. Last month, Credit Suisse and Deutsche Bank were chosen to advise as consultants to two Vietnamese banks on their equitizations this year.
Analysts expect strong growth of Vietnam's securities market over the next two years, thanks to substantial inflows of foreign direct and portfolio investment following the country's accession to the World Trade Organization (WTO).
The number of listed companies on the Ho Chi Minh City Securities Trading Center and Hanoi
Securities Trading Center surged to a combined 193 from 32 in 2006.
The total market capitalization of the two bourses rose 20 fold year-on-year to reach US$14 billion, or 22.7% of the country's GDP in 2006.
The State Securities Commission expects the stock market capitalization to jump to 30 to 40% of GDP by 2010.
State-owned SCIC, a strategic investment arm of the government of Vietnam, was created in mid-2005 to take capital ownership of the country's 5,000-plus state-run enterprises, which accounted for about 70% of the country's tax revenues.
SCIC can raise funds through issuing bonds and fund investment certificates. It is authorized to make direct and indirect investments domestically or abroad in any form or sectors.
Morgan Stanley will appoint the joint venture's chief executive, a source familiar with the tie-up said, while SCIC will name the firm's chairman. Both companies, along with staff, will hold equity stakes in the combined firm.
Source: Thanh Nien
Friday, March 16, 2007
Changes in the OTC market
There will be a lot of changes relating to several hundreds share items being transacted on the OTC (over the counter) market, when public companies have to follow the regulations on registration, information exposure and securities deposit as required by the Securities Law.
According to the Securities Law, there are three groups of public companies, including the companies that 1. have offered shares to the public 2. have listed on the bourse and 3. have at least 100 shareholders, not including the professional financial institutions, and have the contributed chartered capital of VND 10bil (0.62mio US$) at least.
The companies belonging to the third group must register to the competent authorities within 90 days since the day of becoming public companies. With this regulation, nearly all enterprises and banks, that have shares traded on the OTC market, are public companies. The Ministry of Finance has hurried public securities to register in March.
Public companies must expose periodic and unscheduled information as required by the Securities Law, and must seek permissions when issuing shares, deposit securities at depository centres, and follow the principles on companies’ governance stipulated by the Enterprise Law and circulars by the Ministry of Finance.
The shareholders, who hold more than 5% of shares, must report when they make the transactions that can change the share ownership in public companies by 1%. Public companies will be punished if they violate the regulations of the Securities Law.
Once the shares are deposited at the depository centre, the transfer of shares to be carried out by the companies or agents (securities companies) would be considered unlawful. The shares will only be transferred after they are deposited, and the ownership of the buyers will only be recognised by depository centre.
The requirement on depositing shares would lead to the big change in the OTC market. From now on, the transactions of OTC shares would be simpler and quicker. OTC shares will also have codes and be transacted through the accounts opened at securities companies like listing shares.
It is expected that securities companies will pay more attention to providing services relating to OTC shares, while freelance brokers will have no job to do. Making transactions through the depository centre will also help successfully control the transactions of shareholders, which will serve the taxation in the future. It is estimated that before the law on PIT (personal income tax) comes into effect in 2009, there will be a big wave of share assignment to avoid tax.
Analysts said that public companies all will list on the bourse, as the responsibilities they must fulfil are similar to the responsibilities of listing companies.
Source: VEN
According to the Securities Law, there are three groups of public companies, including the companies that 1. have offered shares to the public 2. have listed on the bourse and 3. have at least 100 shareholders, not including the professional financial institutions, and have the contributed chartered capital of VND 10bil (0.62mio US$) at least.
The companies belonging to the third group must register to the competent authorities within 90 days since the day of becoming public companies. With this regulation, nearly all enterprises and banks, that have shares traded on the OTC market, are public companies. The Ministry of Finance has hurried public securities to register in March.
Public companies must expose periodic and unscheduled information as required by the Securities Law, and must seek permissions when issuing shares, deposit securities at depository centres, and follow the principles on companies’ governance stipulated by the Enterprise Law and circulars by the Ministry of Finance.
The shareholders, who hold more than 5% of shares, must report when they make the transactions that can change the share ownership in public companies by 1%. Public companies will be punished if they violate the regulations of the Securities Law.
Once the shares are deposited at the depository centre, the transfer of shares to be carried out by the companies or agents (securities companies) would be considered unlawful. The shares will only be transferred after they are deposited, and the ownership of the buyers will only be recognised by depository centre.
The requirement on depositing shares would lead to the big change in the OTC market. From now on, the transactions of OTC shares would be simpler and quicker. OTC shares will also have codes and be transacted through the accounts opened at securities companies like listing shares.
It is expected that securities companies will pay more attention to providing services relating to OTC shares, while freelance brokers will have no job to do. Making transactions through the depository centre will also help successfully control the transactions of shareholders, which will serve the taxation in the future. It is estimated that before the law on PIT (personal income tax) comes into effect in 2009, there will be a big wave of share assignment to avoid tax.
Analysts said that public companies all will list on the bourse, as the responsibilities they must fulfil are similar to the responsibilities of listing companies.
Source: VEN
Thursday, March 08, 2007
Cost of steel, building materials rises
The price of construction steel this month is 500,000-700,000 VND (30-43 US%) per tonne higher than in the same period last year, according to Dinh Huy Tam, secretary of the Viet Nam Steel Association.
Prices for different varieties of construction steel were currently running from about 8.55 million VND (534 US%) to 9.1million VND (568 US$) per tonne, Tam said, with prices in HCM City generally running higher than elsewhere in the nation.
One-tonne wire rods sold by Vina Kyoei in HCM City were currently priced at 8.78 million VND (548 US$).
A steel trader in HCM City predicted that the price of construction steel would continue to increase this month and prices by the end of March would exceed 10 million VND per tonne.
The leading cause for the climbing steel prices were the high cost of steel ingot imported from China, a major raw material in steel production.
"About 70% of our imported ingot is from China," said Tam. "So, when China changes its policy on ingot exports, we will be affected."
China recently increased the export tax on steel ingot from 10% to 15%, driving up prices by 500 US$ per tonne. Ingot from Russia and Japan was even more costly, at 530 US$ per tonne and 525-530 US$ per tonne, respectively.
Building costs in HCM City have been seeing a general increase, with the costs of other construction materials also going up. Cement prices have increased to 51-53,000 VND per package, a rise of about 12%. Construction brick has also gone up by 2%.
Hoang Quoc Tuan, deputy director of Dong Nai Brick and Tile Co, noted that, since the beginning of this year, his company has had to raise the prices of many types of construction materials by 3-5%.
Source: VNA
Prices for different varieties of construction steel were currently running from about 8.55 million VND (534 US%) to 9.1million VND (568 US$) per tonne, Tam said, with prices in HCM City generally running higher than elsewhere in the nation.
One-tonne wire rods sold by Vina Kyoei in HCM City were currently priced at 8.78 million VND (548 US$).
A steel trader in HCM City predicted that the price of construction steel would continue to increase this month and prices by the end of March would exceed 10 million VND per tonne.
The leading cause for the climbing steel prices were the high cost of steel ingot imported from China, a major raw material in steel production.
"About 70% of our imported ingot is from China," said Tam. "So, when China changes its policy on ingot exports, we will be affected."
China recently increased the export tax on steel ingot from 10% to 15%, driving up prices by 500 US$ per tonne. Ingot from Russia and Japan was even more costly, at 530 US$ per tonne and 525-530 US$ per tonne, respectively.
Building costs in HCM City have been seeing a general increase, with the costs of other construction materials also going up. Cement prices have increased to 51-53,000 VND per package, a rise of about 12%. Construction brick has also gone up by 2%.
Hoang Quoc Tuan, deputy director of Dong Nai Brick and Tile Co, noted that, since the beginning of this year, his company has had to raise the prices of many types of construction materials by 3-5%.
Source: VNA
Wednesday, March 07, 2007
Vietnam hikes gasoline prices
Gasoline became VND900 (0.06 US$) per liter costlier with effect from 3 pm. A92 gas now costs VND11,000 (0.68 US$); A90 gas VND10,800; and A83 gas 10,600.
Kerosene and diesel stay unchanged at VND8,600.
Tariffs on all oil import have been cut from 15% to 10%.
The move came as a surprise to consumers and petroleum businesses since a few days ago the government was considering either raising prices by VND500 or cutting import tax after world crude prices began to recover.
Globally, oil climbed above 60 US$ Tuesday, drawing strength from a rise in Asian and European stocks and on forecasts for a drop in gasoline inventories in the US.
Analysts said there was no sign yet of weakening oil use in the US and China, the top two consumers.
US crude gained 59 cents to 60.66 US$ a barrel, having dropped 1.57 US$ on Monday to touch a two-week low of 59.55 US$.
At a press conference Tuesday to announce the new measures, Deputy Minister of Finance Truong Chi Trung said they were meant to align domestic prices with global trends while ensuring the government, consumers, or businesses did not suffer.
The retail price should have been hiked by VND1,500 rather than VND900 since gasoline distributors would suffered a loss of VND200 per liter, he revealed. This meant the government would have to continue subsidizing oil.
Vietnam periodically adjusts import taxes and retail prices to cope with global oil price volatility and check petrol importers’ profits.
Despite being one of Southeast Asia’s largest crude exporters, Vietnam does not have a refinery and is completely dependent on import of petroleum products.
Last year its oil subsidy bill came to VND8-9 trillion (499 – 561mio US$).
Source: Thanh Nien
Kerosene and diesel stay unchanged at VND8,600.
Tariffs on all oil import have been cut from 15% to 10%.
The move came as a surprise to consumers and petroleum businesses since a few days ago the government was considering either raising prices by VND500 or cutting import tax after world crude prices began to recover.
Globally, oil climbed above 60 US$ Tuesday, drawing strength from a rise in Asian and European stocks and on forecasts for a drop in gasoline inventories in the US.
Analysts said there was no sign yet of weakening oil use in the US and China, the top two consumers.
US crude gained 59 cents to 60.66 US$ a barrel, having dropped 1.57 US$ on Monday to touch a two-week low of 59.55 US$.
At a press conference Tuesday to announce the new measures, Deputy Minister of Finance Truong Chi Trung said they were meant to align domestic prices with global trends while ensuring the government, consumers, or businesses did not suffer.
The retail price should have been hiked by VND1,500 rather than VND900 since gasoline distributors would suffered a loss of VND200 per liter, he revealed. This meant the government would have to continue subsidizing oil.
Vietnam periodically adjusts import taxes and retail prices to cope with global oil price volatility and check petrol importers’ profits.
Despite being one of Southeast Asia’s largest crude exporters, Vietnam does not have a refinery and is completely dependent on import of petroleum products.
Last year its oil subsidy bill came to VND8-9 trillion (499 – 561mio US$).
Source: Thanh Nien
Tuesday, March 06, 2007
Share trading income may be taxed
Vietnam may tax revenues from trading shares to help cool its fast expanding stock market, state media quoted Finance Minister Vu Van Ninh on Tuesday as saying.
The tax would target mainly income from short-term investments and "to limit and control credit being shifted to investing in stocks", the Saigon Giai Phong newspaper quoted Ninh as telling a National Assembly meeting.
Vietnam's share index, VN-Index, has risen more than 50% so far this year. The rise has drawn more investors into the $16 billion exchange and expanded trade in unofficial markets.
Financial experts say a tax would be a better approach than introducing capital or currency controls on the stock market, as proposed by the central bank, which would scare off foreign investors and lead to a market fall.
Last week, Prime Minister Nguyen Tan Dung said Vietnam would tighten market inspections only to reinforce regulations but would not apply any urgent measures to control foreign capital.
Ninh told the meeting of the Assembly's Standing Committee on Monday Vietnam would "gradually narrow the unofficial markets to minimise chain-impact risk caused by the overheated market expansion", the Saigon Giai Phong reported.
A Vietnamese investor said news on the Finance Ministry's intention to impose income tax would not have any immediate impact on the market.
Financial experts say a tax would be a better approach than introducing capital or currency controls on the stock market, as proposed by the central bank, which would scare off foreign investors and lead to a market fall.
Last week, Prime Minister Nguyen Tan Dung said Vietnam would tighten market inspections only to reinforce regulations but would not apply any urgent measures to control foreign capital.
Ninh told the meeting of the Assembly's Standing Committee on Monday Vietnam would "gradually narrow the unofficial markets to minimise chain-impact risk caused by the overheated market expansion", the Saigon Giai Phong reported.
A Vietnamese investor said news on the Finance Ministry's intention to impose income tax would not have any immediate impact on the market.
"A part of the public has given up public work and spent time on investing in shares," the newspaper quoted deputy head of the Assembly's Economic and Budget Committee Tao Huu Phung as saying.
While offices of stock broking firms in Hanoi and Ho Chi Minh City have been packed by investors in the past several months, the central bank banned its officials from share trading during working hours early last month.
Source: Reuters
The tax would target mainly income from short-term investments and "to limit and control credit being shifted to investing in stocks", the Saigon Giai Phong newspaper quoted Ninh as telling a National Assembly meeting.
Vietnam's share index, VN-Index, has risen more than 50% so far this year. The rise has drawn more investors into the $16 billion exchange and expanded trade in unofficial markets.
Financial experts say a tax would be a better approach than introducing capital or currency controls on the stock market, as proposed by the central bank, which would scare off foreign investors and lead to a market fall.
Last week, Prime Minister Nguyen Tan Dung said Vietnam would tighten market inspections only to reinforce regulations but would not apply any urgent measures to control foreign capital.
Ninh told the meeting of the Assembly's Standing Committee on Monday Vietnam would "gradually narrow the unofficial markets to minimise chain-impact risk caused by the overheated market expansion", the Saigon Giai Phong reported.
A Vietnamese investor said news on the Finance Ministry's intention to impose income tax would not have any immediate impact on the market.
Financial experts say a tax would be a better approach than introducing capital or currency controls on the stock market, as proposed by the central bank, which would scare off foreign investors and lead to a market fall.
Last week, Prime Minister Nguyen Tan Dung said Vietnam would tighten market inspections only to reinforce regulations but would not apply any urgent measures to control foreign capital.
Ninh told the meeting of the Assembly's Standing Committee on Monday Vietnam would "gradually narrow the unofficial markets to minimise chain-impact risk caused by the overheated market expansion", the Saigon Giai Phong reported.
A Vietnamese investor said news on the Finance Ministry's intention to impose income tax would not have any immediate impact on the market.
"A part of the public has given up public work and spent time on investing in shares," the newspaper quoted deputy head of the Assembly's Economic and Budget Committee Tao Huu Phung as saying.
While offices of stock broking firms in Hanoi and Ho Chi Minh City have been packed by investors in the past several months, the central bank banned its officials from share trading during working hours early last month.
Source: Reuters
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