Real estate and stock profit tax: Correct but don't shock

Taxing investment income is common, but Vietnam needs to refer to the policies of other countries, such as the US allowing losses to be carried forward to the following year to reduce taxes payable, or Singapore levying very low or no tax on securities interest to encourage investment...

The Ministry of Finance proposes to apply personal income tax to real estate transfers by individuals by multiplying taxable income by the tax rate of 20% for each transfer - Photo: NGOC HIEN

Vietnam's Ministry of Finance is seeking comments on a draft revised Law on Personal Income Tax, which proposes a 20% tax on profits from the transfer of real estate and securities by individuals.

This policy aims to replace the current tax collection method (2% on real estate sale price, 0.1% on securities sale price per transaction).

This would allow sellers with losses to avoid paying taxes, while those with large profits would pay more taxes. However, the proposal also raises concerns about its market impact and feasibility.

Investor perspective and international practices

Since early 2025, Vietnam has pursued an expansionary monetary policy to support growth, with low interest rates and abundant credit. While the money injection has helped stimulate the economy , history shows that no economy can grow sustainably based on cheap money and asset bubbles alone.

In fact, when money flows excessively into land and stocks, asset prices escalate faster than the real economy, creating potential risks of macroeconomic instability.

Therefore, many countries use tax tools to increase costs and reduce the attractiveness of asset speculation. Vietnam's proposal of a 20% tax on real estate and stock profits can be understood as a measure to rebalance cash flow: directing capital away from short-term speculative channels to their true value.

However, the 20% tax rate is considered too high compared to the current level, and could cause shock if applied suddenly.

Especially if there is no distinction between holding periods and no allowance for losses between years, the impact will be huge.

Short-term investors may reduce trading, withdraw capital to other channels or be forced to hold stocks longer instead of buying and selling flexibly.

In addition, the draft does not clarify the expenses that are deductible when calculating interest; many actual expenses may not be counted, putting investors at risk of being taxed on nominal profits that are higher than actual.

International practice shows that taxing investment income is common, but the rates and methods vary widely. Many countries offer tax incentives for long-term investment: for example, Japan imposes a flat tax of around 20% on stock gains; the United States allows investors to carry forward losses to reduce their tax liability. Some countries levy very low taxes on each transaction or do not tax stock gains at all to encourage individual investors (such as Singapore).

In the market, the new tax is expected to change investor behavior. In the short term, many people may be "shocked" by the sharp increase in taxes, especially for real estate held for less than 2 years, which will be subject to a tax of up to 10% of the selling price (if the cost cannot be proven).

In the context of the real estate market slowdown, a reasonable roadmap is needed to avoid liquidity shock. In the long term, a 20% profit tax will help filter investors: short-term speculators will be reduced, while long-term investors will consider more carefully.

A 20% tax may reduce short-term trading, but it encourages holding stocks longer and transferring some capital to long-term investment channels - Photo: QUANG DINH

Many fear that sellers will add taxes to the price of the house, causing prices to rise and ultimately the buyer will pay the tax. But in reality, the market adjusts itself based on supply and demand, and does not allow sellers to raise prices arbitrarily.

For stocks, a 20% tax may reduce short-term trading, but it encourages holding stocks longer and diverting some capital to long-term investments.

However, we should consider adding incentives for long-term investment (for example, tax exemption/reduction for stocks held for more than 1 year), the new policy will contribute to stabilizing the market in the long term.

Tax authorities need a complete transaction database

The current method of collecting 2% of the real estate sale price is showing many shortcomings. Because it does not take into account profits and losses, this flat calculation method creates an incentive for sellers to declare a lower price in the contract to evade taxes.

Taxation based on profits gives people an incentive to declare the correct purchase price and keep receipts for expenses to claim deductions. When real estate prices rise sharply, the government is also able to collect more.

To collect taxes correctly and fully using the new method, it requires management capacity and appropriate data infrastructure. Tax authorities need a complete transaction database to accurately determine the cost and expenses of each transaction, thereby collecting taxes effectively.

Currently, all real estate transfer changes have been updated at the tax office - an initial advantage - but the information system still needs to be upgraded synchronously before applying the tax on interest. This policy should be implemented carefully and gradually.

Businessman Dinh Hong Ky is currently the chairman of Secoin Joint Stock Company, chairman of the Ho Chi Minh City Construction and Building Materials Association (SACA), chairman of the Ho Chi Minh City Green Business Association (HGBA) and vice chairman of the Ho Chi Minh City Business Association (HUBA).

Consider the route , avoid shock

The proposal to impose a 20% tax on real estate and securities profits demonstrates the determination of the management agency to direct the market towards transparency and international practices. To effectively implement, it is necessary to design it carefully, flexibly and synchronously.

First, a clear implementation roadmap needs to be developed. Immediate imposition of high tax rates in a weak market could be a shock; therefore, a transitional period or pilot implementation in Hanoi and Ho Chi Minh City could be considered, gradually increasing sanctions as the system becomes ready.

Second, the authorities should soon complete the land database, connect tax information, banks, notaries... to create a foundation for determining the original purchase price, costs and monitoring transactions. This not only serves to collect taxes accurately but also helps the market operate more transparently and effectively.

Third , tax policy needs to be flexible and humane. Legislative bodies can add exemptions for legitimate cases: such as tax exemptions or reductions for unavoidable transactions (selling a house due to difficult circumstances) or low profits to support people.

Fourth , this is a rather complicated tax, requiring taxpayers to keep documents and make detailed declarations. Tax authorities should have specific instructions on reasonable deductible expenses, how to calculate profits and losses, and how to declare in the most convenient way...

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DINH HONG KY

Source: https://tuoitre.vn/thue-loi-nhuan-bat-dong-san-chung-khoan-dung-nhung-dung-gay-soc-20250727175217981.htm