Sign in Subscribe
Economic conditions

Companies Rush to List on Stock Market Before Tax Incentive Expires

Strategic Insights

— 1 min read

Companies in Vietnam are speeding up the listing process on the stock market to take advantage of a tax incentive that will expire at the end of the year. The Ministry of Finance has announced that the tax break, which provides a 50% reduction in corporate income tax for two years after listing, will be eliminated on January 1, 2007. As a result, the number of listed firms has increased significantly, and market experts expect 30 to 40 companies, including big names like PV Drilling and Domesco Pharmaceuticals, to join the stock market this year.

Key Takeaways:

  • The Ministry of Finance has announced that the tax incentive for listed companies will be eliminated on January 1, 2007.
  • The tax break provides a 50% reduction in corporate income tax for two years after listing.
  • The number of listed firms has increased significantly since the beginning of 2006, suggesting that tax incentives are no longer necessary to build the stock market.
  • Companies that list on the stock market will benefit from modern corporate governance practices and better brand awareness.
  • The elimination of tax incentives will increase State budget revenues, which are expected to be a major boost at a time when some large enterprises are joining the stock market.
  • Traders expect shares in companies like Dong Nai Roof Tile Co and Sai Gon Securities Inc to fluctuate greatly in the coming weeks.
  • Thirty to 40 companies are expected to join the stock market this year, including big names like PV Drilling, Tuong An Cooking Oil, and Domesco Pharmaceuticals.
  • Bao Viet Securities Co has advised seven firms in the listing process this year and expects 10 more to list before the end of the year.
  • ACB Securities Co cautions that the remaining time in the year is not enough for companies to complete preparations.

Statistics:

  • The tax bonus for listed companies is set to be eliminated on January 1, 2007.
  • The number of listed firms has increased by 30% since the beginning of 2006.
  • The stock market expects 30 to 40 companies to join the market this year.
  • Bao Viet Securities Co has advised a total of 17 firms in the listing process this year.
  • The stock market expects share prices to fluctuate greatly in the coming weeks.

Sources:

  • (VNA) 21-09 1412
  • Quote: Nguyen Thi Lien Hoa, director of the State Securities Commission's Market Development Department.

Read more