Vietnam: How to Effectively Tax Crypto Without "Scaring" Investors

Vietnam is getting closer to legalizing encryption, opening up the opportunity to tax a market worth over 100 billion USD with 17 million owners – ranking 5th globally in terms of interest, according to Chainalysis. However, how to effectively tax without “scaring” investors is a tricky problem. Dr. Chu Thanh Tuan, RMIT University Vietnam, believes that cryptocurrency taxation is not only a source of budget revenue but also must avoid harming the market or pushing capital out of the country. He suggested a low transaction tax, such as 0.1%, which could bring in 800 million USD annually without causing disruption, according to estimates from the Vietnam Blockchain Association. In addition, personal income tax from profits or corporate tax of (20%) for cryptocurrency companies is also a possible direction. Another source of revenue is exchange licensing fees, which, like the one in Dubai, are both controlling and lucrative. However, the challenge is not small. The anonymity of blockchain makes it almost impossible to track transactions if investors use personal wallets or DeFi platforms to evade taxes. The regulatory framework is unclear – is cryptocurrency an asset, commodity or a method of payment? – the more difficult it is for tax authorities. Dr. Tuan warned that too high taxes, such as India with 30% of profits and 1% of transactions, can cause investors to “run” to Singapore and Dubai, losing revenue. To succeed, Vietnam needs low, simple taxes, VAT exemption like the EU, and investment in blockchain monitoring technology. International cooperation is also important to prevent cross-border tax evasion. If balanced, Vietnam will not only collect hundreds of millions of dollars but also build a sustainable cryptocurrency ecosystem.