Is foreign currency trading not subject to value-added tax in Vietnam?

Who is the taxpayer of value-added tax in Vietnam?

According to the provisions set out in Article 4 of the Law on Value-Added Tax 2008:

A taxpayer of value-added tax is an organization or individual producing, trading goods or services subject to value-added tax, and organizations or individuals importing goods subject to value-added tax.

Is foreign currency trading not subject to value-added tax in Vietnam?

Based on Article 5 of the Law on Value-Added Tax 2008 (amended by Clause 1 Article 1 of the Law on Value-Added Tax, Special Consumption Tax, and Amended Tax Management Law 2016, Clause 1 Article 1 of the Amended Law on Value-Added Tax 2013 and supplemented by Clause 1 Article 3 of the Law on Amendments to Tax Laws 2014), the subjects exempt from value-added tax include:

Non-taxable objects

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8. The following financial, banking, and securities services:

a) Credit services including: lending; discounting, re-discounting negotiable instruments, and other valuable papers; guarantee; financial leasing; issuance of credit cards; domestic factoring; international factoring; other forms of credit in accordance with the law;

b) Lending services by taxpayers not being credit institutions;

c) Securities trading including: securities brokerage; securities self-trading; underwriting securities issuances; securities investment consulting; securities custody; fund management; securities investment portfolio management; market organization services of the stock exchange or securities trading centers; other securities trading activities as prescribed by law;

d) Capital transfer including: partial or entire transfer of invested capital, including the case of selling an enterprise to another enterprise for production and business; securities transfer; other forms of capital transfer as regulated by law;

dd) Debt selling;

e) Foreign currency trading;

g) Derivative financial services including: interest rate swaps; forward contracts; futures contracts; currency options; other derivative financial services as prescribed by law;

h) Sale of secured assets of loans of organizations in which the state holds 100% of charter capital established by the Government of Vietnam to handle bad debts of Vietnamese credit institutions.

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Foreign currency trading is among the subjects exempt from value-added tax.

Is foreign currency trading not subject to value-added tax in Vietnam? (Image from the Internet)

What are regulations on the value-added tax rate in Vietnam?

Based on Article 8 of the Law on Value-Added Tax 2008 (amended by Clause 3 Article 1 of the Amended Law on Value-Added Tax 2013, Article 1 of the Law on Value-Added Tax, Special Consumption Tax, and Amended Tax Management Law 2016, Article 3 of the Law on Amendments to Tax Laws 2014) and Decree 72/2024/ND-CP detailing the VAT rates:

The 0% tax rate applies to exported goods and services, international transportation, and goods and services not subject to value-added tax as stipulated in Article 5 of the Law on Value-Added Tax 2008 (amended by Article 1 of the Law on Value-Added Tax, Special Consumption Tax, and Amended Tax Management Law 2016, supplemented by Article 3 of the Law on Amendments to Tax Laws 2014) when exported, except for the following cases:

- Transfer of technology and transfer of intellectual property rights abroad.

- Reinsurance services abroad;

- Credit granting services;

- Capital transfer;

- Derivative financial services;

- Postal and telecommunications services;

- Exported products specified in Clause 23 Article 5 of the Law on Value-Added Tax 2008 (amended by Article 1 of the Law on Value-Added Tax, Special Consumption Tax, and Amended Tax Management Law 2016).

Exported goods and services are those consumed outside Vietnam, in non-tariff areas; goods and services supplied to foreign customers as stipulated by the Government of Vietnam.

The 5% tax rate applies to the following goods and services:

- Clean water for production and living purposes;

- Ores for fertilizer production; pest control substances and growth stimulants for livestock and crops;

- Excavation, dredging services for agricultural channels, ponds, lakes for agricultural production; planting, nurturing, pest control for crops; preliminary processing, preservation of agricultural products;

- Unprocessed agricultural, breeding, aquatic products, except those specified in Clause 1 Article 5 of the Law on Value-Added Tax 2008 (amended by Article 1 of the Law on Value-Added Tax, Special Consumption Tax, and Amended Tax Management Law 2016).

- Preliminary processed rubber latex; preliminary processed rosin; nets, ropes, and yarns for making fishing nets;

- Fresh food; unprocessed forest products, except timber, bamboo shoots, and products specified in Clause 1 Article 5 of the Law on Value-Added Tax 2008 (amended by Article 1 of the Law on Value-Added Tax, Special Consumption Tax, and Amended Tax Management Law 2016).

- Sugar; by-products in sugar production, including molasses, bagasse, filter mud;

- Products made from jute, rush, bamboo, rattan, leaves, straw, coconut husks, shells, water hyacinths, and other handicrafts made from agricultural raw materials; preliminary processed cotton; newsprint;

- Medical equipment and instruments, medical cotton, sanitary napkins; preventive and therapeutic drugs; pharmaceutical products and medicinal materials used as raw materials for the production of preventive and therapeutic drugs;

- Teaching and learning aids, including models, diagrams, boards, chalk, rulers, compasses, and specialized teaching, research, and scientific experiment instruments;

- Cultural, exhibition, sports, physical training activities; art performance, film production; importation, release, and screening of films;

- Children's toys; books of all kinds, except those specified in Clause 15 Article 5 of the Law on Value-Added Tax 2008 (amended by Article 1 of the Law on Value-Added Tax, Special Consumption Tax, and Amended Tax Management Law 2016).

- Scientific and technological services as stipulated by the Law on Science and Technology.

- Selling, leasing, renting, and purchasing social housing as stipulated by the Housing Law.

The 10% tax rate applies to goods and services not subject to the 0% and 5% tax rates.

The 8% tax rate applies to goods and services subject to VAT reduction according to Decree 72/2024/ND-CP, effective from July 1, 2024, to December 31, 2024.

Thus, depending on the taxable object, the applicable value-added tax rate is 0%, 5%, 8%, or 10%.