Vietnam is emerging as one of the leading countries in the world in terms of interest in cryptocurrency, with about 17 million people owning this digital asset. In the context of the continuously expanding cryptocurrency market, the Ministry of Finance of Vietnam is actively accelerating the process of building a legal framework to effectively manage and maximize the economic potential that this sector brings. Below are the proposals currently being considered to tax cryptocurrency investors.
1. Why does the government want to manage and tax cryptocurrency?
Vietnam is emerging as one of the countries with the highest level of interest and participation in cryptocurrency (crypto) globally. According to a report from Chainalysis, Vietnam ranks 5th worldwide in terms of interest in this digital asset and 3rd in using international trading platforms. It is estimated that about 17 million Vietnamese currently own cryptocurrency, with a total market value exceeding 100 billion USD.
Legalizing and taxing cryptocurrency is not only a global trend but also a strategic move by Vietnam to harness the economic potential of this market. Worldwide, many countries like the USA, South Korea, and India have implemented various tax models to control and exploit revenue from crypto. In Vietnam, the main reasons driving this policy stem from two primary objectives: increasing budget revenue and establishing transparency for the market.
The Vietnam Blockchain Association estimates that if a tax rate of 0.1% is applied on each cryptocurrency transaction, the state budget could collect more than 800 million USD per year. This is a significant figure, especially in the context of Vietnam seeking resources to recover economically after the pandemic and invest in technology infrastructure. Additionally, managing crypto also helps minimize the risks of money laundering, financial fraud, and protect investors from unpredictable market fluctuations.
Moreover, the uncontrolled development of cryptocurrency also poses a risk of capital outflow. Without appropriate policies, investors may easily transfer assets to countries with more favorable legal environments, such as Singapore or Dubai, causing harm to the domestic economy. Therefore, building a tax system is not only an opportunity to increase revenue but also a way to retain capital flows and promote the sustainable development of the domestic crypto market.
2. Specific tax proposal from experts and authorities
According to experts from RMIT, the Vietnam Blockchain Association, and the Ministry of Finance, there are currently several main tax and management orientations as follows:
Low transaction tax: The Vietnam Blockchain Association suggests applying a low transaction tax rate of about 0.1% as a feasible solution to both create budget revenue and avoid disrupting market activities. With this tax rate, it is estimated that Vietnam could collect more than 800 million USD each year – a significant figure that does not place great pressure on investors. This is seen as an ideal starting point, inspired by how stock transaction taxes are applied, aimed at encouraging long-term participation and maintaining liquidity in the domestic crypto market.
Personal and corporate income tax: Experts from RMIT Vietnam propose applying personal income tax on profits from cryptocurrency investments, similar to how profits from stocks or real estate are taxed. If cryptocurrency is recognized as an investment asset, this tax will create fairness among different types of assets, while also increasing revenue from investors with significant profits. Meanwhile, companies operating in the blockchain and cryptocurrency sector may be subject to a corporate income tax of 20%, equal to traditional businesses. This approach not only rationalizes the tax system but also encourages digital technology companies to operate transparently in Vietnam.
Licensing fees for exchanges: Another proposed direction is to charge licensing fees for cryptocurrency exchanges. Taking an example from Dubai – where crypto projects are required to pay fees for legal licensing – Vietnam can apply a similar model to tightly control trading platforms while also creating additional revenue outside of taxes. This solution not only helps mitigate risks from low-quality projects but also enhances transparency, protecting investors from market fluctuations. This is a practical approach, aligning with management goals without placing direct pressure on individual users.
VAT exemption: To avoid double taxation and enhance Vietnam's position in the region, experts recommend exempting value-added tax (VAT) on cryptocurrency, following the model of the European Union and Singapore. The VAT exemption not only reduces the burden on investors but also makes Vietnam a more attractive destination compared to neighboring countries with complex tax policies. This is a strategic move to maintain competitiveness and attract capital flows from international markets.
3. What advantages and difficulties do investors face if taxes are applied?
The upcoming cryptocurrency tax policy in Vietnam brings both positive prospects and notable concerns.
3.1. Advantages
Better investor protection in disputes: When laws and tax policies are clearly enacted, cryptocurrency will officially be recognized as a legal asset in Vietnam. This recognition not only marks a turning point in legitimizing crypto but also creates a solid legal foundation for related activities, from ownership to trading. Investors will benefit from clearer legal protections in case of disputes. With a transparent legal framework, issues like fraud or asset loss will have a basis for resolution, providing peace of mind for participants in the crypto market.
The crypto community will develop stronger: The new policy will help the cryptocurrency community in Vietnam escape the 'gray' legal area, creating opportunities for significant growth. Activities such as fundraising, implementing blockchain projects, or organizing networking events (meetups) will become easier, contributing to the promotion of the domestic crypto ecosystem.
3.2. Difficulties
The risk of capital outflow if the tax is too high: If the tax rate applied is too high or the tax system is complex, capital flows may shift to friendlier markets such as Singapore or Dubai. The lesson from India is a clear warning: when a 30% tax on profits and 1% on each transaction was imposed, domestic trading volume dropped by up to 70%, pushing investors to seek international exchanges. Vietnam needs to be cautious to avoid a similar scenario.
Retail investors are affected: Retail investors, especially those who frequently engage in short-term trading, may face difficulties when the tax policy is implemented. High taxes or cumbersome procedures will reduce profits, even prompting this group to consider exiting the market, affecting the overall vibrancy of the Vietnamese crypto community.
4. Conclusion
Taxing cryptocurrency in Vietnam is an inevitable step to keep up with global trends and exploit the economic potential of this market. To realize this potential, Vietnam needs to quickly完善 the legal framework, invest in monitoring technology, and learn from the experiences of countries that are ahead. Only then can cryptocurrency truly become a sustainable 'gold mine' for the economy.
Source: Theblock101.com