Are enterprises and individuals engaged in securities trading not subject to value added tax in Vietnam?
What is securities trading in Vietnam?
According to Clause 28, Article 4 of the 2019 Law on Securities in Vietnam, securities trading is defined as follows:
Securities trading in Vietnam include brokerage, proprietary trading, securities underwriting, securities investment consulting, securities investment fund management, securities portfolio management and provision of securities-related services in accordance with Article 86 of the 2019 Law on Securities in Vietnam, specifically:
- Securities brokerage means the brokerage of sale and purchase of securities.
- Proprietary trading refers to a securities company that buys securities from or sells securities to itself.
- Securities underwriting means an underwriter’s commitment to the issuer to buy part or all of the issuer’s securities for reselling, or to buy the unsold securities, or to put the best efforts to sell as much as possible of a securities offering.
- Securities investment consulting means the provision of analysis result, analysis report to the client and giving recommendations regarding the purchase, sale or holding of securities.
- Securities portfolio management means the management of an investor’s sale, purchase and holding of securities and other assets of the investor under an agreement.
- Securities investment fund management means management of the sale, purchase and holding of securities and other assets of the securities investment fund.
Are enterprises and individuals engaged in securities trading not subject to value added tax in Vietnam?
What are securities services in Vietnam?
According to Article 86 of the 2019 Law on Securities in Vietnam on securities services as follows:
Operation of securities companies, fund management companies, branches and representative offices in Vietnam of foreign securities companies and foreign fund management companies
1. A securities company licensed to provide securities brokerage services may:
a) Receive and manage securities trading accounts of individuals; distribute securities or act as securities distribution agent; manage securities trading account; manage other enterprises’ lists of securities holders;
b) Provide online securities trading services; provide or cooperate with credit institutions granting loans for purchase of securities or securities lending; provide or cooperate with credit institutions in advancing payment for securities; securities depository; offset and pay securities; provide other derivative-related services.
2. A securities company licensed for proprietary trading may trade securities on its proprietary trading account, make investment, contribute capital, issue and offer financial products.
3. A securities company licensed for securities underwriting may provide securities offering consultancy services; perform pre-offering procedures; act as an agent for securities depository, payment, transfer; provide consultancy on restructuring, consolidation, acquisition, rearrangement of enterprises; provide consultancy of enterprise administration, business strategies; provide consultancy on offering, listing, registration of securities; provide consultancy on enterprise equitization.
4. A securities company licensed to provide securities investment consultancy services may provide services for its clients in accordance with Clause 32 Article 4 of this Law.
5. In addition to the services specified in Clause 1, 2, 3, 4 of this Article, a securities company may only provide other finance services conformable with regulations of law after a written report is submitted to SSC. SSC is entitled to suspend or terminate provision of other financial services of a securities company if it is not conformable with law or poses a risk to the securities market system.
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8. The Minister of Finance shall promulgate specific regulations on operation of securities companies, fund management companies, branches and representative offices in Vietnam of foreign securities companies and foreign fund management companies; permitted services; suspension and termination of other financial services of securities companies specified in Clauses 1, 2, 3, 4, 5 of this Article.
Thus, the above-mentioned services are considered securities trading services.
Are enterprises and individuals engaged in securities trading not subject to value added tax in Vietnam?
Pursuant to Point c, Clause 8, Article 4 of Circular No. 219/2013/TT/BTC and Official Dispatch No. 14480/CTHN-TTHT in 2022 stipulating as follows:
Goods and services that are not subject to VAT
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8. The finance, banking, and securities services below:
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c) Securities services include: brokerage, proprietary trading, issuance guarantee, investment consultancy, depository, securities investment fund management, securities company management, securities investment portfolio management, market organization services of Stock Exchanges or Securities trading centers, services related to the securities registered and deposited at Vietnam Securities Depository, granting loans for margin trading, advance payment for securities and other types of securities trading prescribed by securities laws.
Information provision, auctions of shares of issuers, technical support for online transactions of Stock Exchanges.
Thus, based on the above provisions, bond issuance agency services, corporate advisory services on financial investments, organization of the General Meeting of Shareholders, offer to buy shares, support for information disclosure, etc. in accordance with the provisions of the law, if this activity is determined to be a securities business activity according to the provisions of the law on securities, it is not subject to VAT.
In case the above-mentioned activities are not securities trading activities as prescribed, they are subject to the 10% VAT rate.
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