Are lending services provided by taxpayers that are not credit institutions subject to VAT in Vietnam from July 1, 2025?

Are lending services provided by taxpayers that are not credit institutions subject to VAT in Vietnam from July 1, 2025?

Pursuant to Clause 9, Article 5 of the Value Added Tax Law 2024 (effective from July 1, 2025), it stipulates that the following entities are not subject to tax:

Entities Not Subject to Tax

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9. The following financial, banking, securities, and trade services:

a) Credit granting services in accordance with the law on credit institutions and specific fees stated in loan agreements between the Government of Vietnam and foreign lenders;

b) Lending services provided by taxpayers who are not credit institutions;

c) Securities trading, including securities brokerage, proprietary trading, securities issuance underwriting, securities investment advisory, securities investment fund management, and securities portfolio management under the law on securities;

d) Capital transfer, including the partial or entire transfer of the invested capital in other economic organizations (regardless of the establishment of a new legal entity), transfer of securities, capital contribution rights, and other forms of capital transfer under the law, including the sale of an enterprise to another for production and business, where the purchasing enterprise inherits all rights and obligations of the selling enterprise under the law. Capital transfer stated in this point does not include project investment transfer, asset selling;

đ) Debt sale, including selling receivables and payables;

e) Foreign exchange trading;

g) Derivative products as prescribed by the law on credit institutions, securities, and commerce, including interest rate swaps, forward contracts, futures contracts, options, and other derivative products;

h) Sale of collateral assets for debts held by organizations fully owned by the state, established by the Government of Vietnam with the function of handling bad debts of Vietnamese credit institutions.

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Thus, lending services provided by taxpayers who are not credit institutions are not subject to VAT.

Are lending services provided by taxpayers that are not credit institutions subject to VAT in Vietnam from July 1, 2025? (Image from the Internet)

Who are VAT payers in Vietnam?

Based on the provisions in Article 3 of Circular 219/2013/TT-BTC, VAT payers are organizations and individuals conducting production, business activities of goods, and services subject to VAT in Vietnam, regardless of the type, form, or method of business (hereinafter referred to as business establishments), and organizations, individuals importing goods or services from abroad subject to VAT (hereinafter referred to as importers), including:

- Business organizations established and registered under the Enterprise Law, the State Enterprise Law (now the Enterprise Law), the Cooperative Law, and other specialized business laws;

- Economic organizations of political organizations, socio-political organizations, social organizations, socio-professional organizations, people's armed forces units, and other organizations;

- Enterprises with foreign-invested capital and foreign parties participating in business cooperation under the Law on Foreign Investment in Vietnam (now the Investment Law); foreign organizations and individuals conducting business in Vietnam without establishing a legal entity in Vietnam;

- Individuals, households, independent business groups, and other entities engaged in production, business, and import activities;

- Organizations and individuals conducting production and business in Vietnam purchasing services (including services associated with goods) from foreign organizations without a permanent establishment in Vietnam, and individuals abroad not residing in Vietnam will be taxpayers, except for cases where declaration and VAT payment are not required as guided in Clause 2, Article 5 of Circular 219/2013/TT-BTC.

The provisions on permanent establishments and non-resident entities follow the laws on corporate income tax and personal income tax.

- Branches of export processing enterprises established to conduct trading activities and related activities in Vietnam as regulated by the law on industrial zones, export processing zones, and economic zones.

When is VAT determined in Vietnam?

According to Article 8 of Circular 219/2013/TT-BTC, the time of VAT determination is stipulated as follows:

- For goods sold, it is the time of transferring ownership or the right to use the goods to the buyer, regardless of whether payment has been made or not.

- For service provision, it is the time of completing service provision or the issuance of the service provision invoice, regardless of whether payment has been made or not.

For telecommunications services, it is the time of completing data reconciliation on telecommunication service charges according to the economic contract between telecommunications service providers, but no later than 2 months from the month in which the charge arises.

- For the supply of electricity and clean water, it is the day of recording electricity and water consumption on the meter for invoicing.

- For real estate business, infrastructure development, house construction for sale, transfer, or lease, it is the time of collection based on the project's implementation progress or the collection schedule stated in the contract. Based on the collected amount, the business establishment declares the output VAT incurred in the period.

- For construction and installation activities, including shipbuilding, it is the time of inspection, handing over the construction works, construction items, and completed construction volumes, regardless of whether payment has been made or not.

- For imported goods, it is the time of registering the customs declaration.