His department, Truong said on Thursday, had not submitted any proposal to the ministry to delay imposition of the taxes pursuant to the new Law on Personal Income Tax, passed in late 2007 and taking effect January 1, 2009.

Rather, the General Department of Taxation had already submitted an official letter to the ministry stating its opposition to any delay in imposing the income tax on stock dividends and a capital gains tax on securities transactions.

The ministry, in turn, has already authorised the general department to prepare guiding regulations to implement the new law.

The State Securities Commission had earlier submitted to the ministry a report on conditions on the securities market and an official letter seeking delay of the new taxes due to investor complaints and the current poor performance of the stock market.

The new law distinguishes between two kinds of taxable income – divided income and capital gains from securities trading – and then applies different schemes of taxation to them. Income from dividends will be taxed at a rate of 5 per cent, while securities trades can be taxed either at a flat rate of 0.1 per cent of the value of each securities transaction, or 20 per cent of the net capital gains accumulated throughout the year.

The policy behind the law is that securities investment is a form of doing business that generates income and that it is therefore reasonable to impose a tax on such income.

But a number of securities experts said collection of the tax at this time was unsuitable due to the chilling effect it might have on a domestic securities market already in the doldrums.

Truong Duy Khiem, head of the brokerage division at ACB Securities Co, said the imposition of the tax now would discourage investment in the domestic securities market.

Investors would consider carefully whether to join the market because the risks of losses were high at a time of global economic downturn, and yet any profit made on securities trades would be taxed, Khiem said.

But Huynh Thi Hoa, head of analysis at Ban Viet Securities Co, said no investors currently had any profits or gains to be taxed.