Fund managers look for tax cuts

Pham Dinh Thi, deputy director of the Ministry of Finance’s Tax Policy Department, said corporate income tax (CIT) reductions for the fund management industry should be considered. “Commercial banks, the main capital mobilisation channel of Vietnam’s economy, are now subject to a CIT rate of 25 per cent. Therefore, we must study and discuss possibilities to lower taxes for fund management companies,” said Thi.

The statement was delivered at a Hanoi-based securities business tax policy conference last week where several fund managers demanded a CIT rate lower than the common 25 per cent tax rate, to stimulate the young fund management industry.

“Stock markets are usually the main capital mobilisation channel attracting 80 per cent of a society’s mobilisation capital. But that’s not the case in Vietnam where banks are the main channel for  short and medium-term funds,” he said. State Securities Commission (SSC) Fund Management Department head Pham Thanh Long said a tax policy review was necessary. “It is necessary to make tax policy changes to encourage investors to deposit in long-term investment funds, instead of speculative funds,” he said.

Long considered the new fund groups, including  real estate investment funds, especially real estate investment trust (REIT) funds which mainly invest in housing and leasing, exchange traded funds (ETFs) and securities investment companies, as the new pillars of the investment fund industry, together with current pillars such as state-managed social insurance funds.

Thi said he would propose a “specific circular” to guide securities businesses. “It’s a rare case to have a  specific circular to guide one sector. But with so many tax policy problems outstanding in the securities sector, I think a specific circular is essential.”

A representative of Vietnam Fund Management Club said according to this club’s calculations, fund investors always had to bear  5 per cent losses compared with other stock market investors due to tax policies and called for a tax reduction for this industry.

Bui Thu Thuy, head for HSBC’s Securities Services, said: “For our international customers, Vietnam is just one of many venues for their portfolio investment and tax policy is one of many important factors for them to compare and consider investments.”