VIETNAM

Source: IMF, International Financial Statistics, June 2021.

• The Vietnamese central bank is the State Bank of Vietnam (SBV -www.sbv.gov.vn).

Bank supervision

• Vietnamese banks are licensed and supervised by the SBV.

• Percentage-based lifting fees may be applied on payments between resident and non-resident bank accounts. 

• Credit transfers are used by the government and companies to pay salaries and suppliers.
• High-value (VND 500 million and above) and urgent credit transfers are settled in real time via the HVSS element of the IBPS.
• Low-value (below VND 500 million), non-urgent and high-volume payments can be settled on a same-day basis via the LVSS element of the IBPS.
• Low-value electronic credit transfers can also be settled by the SVB electronic clearing system and via the NAPAS 24/7 Quick Interbank Funds Transfer service (up to VND 300 million per transaction).
• Leading commercial banks BIDV, Agribank and Vietinbank, also operate an electronic bilateral interbank payment system for non-urgent, low value payment transactions.
• The Joint Stock Bank for Foreign Trade of Vietnam operates an interbank payment system for foreign currency transfers.
• In Q1 2021, there were 31,711,439 thousand transactions processed via the LVSS, with a value of VND 891,729 trillion. In Q4 2020, there were 34,784,211 thousand transactions processed via the LVSS, with a value of VND 993,395 trillion.
• Cross-border transfers can be made via SWIFT and settled through correspondent banks abroad

• Direct debits are used for regular payments, such as utility bills.
• Direct debits are settled on a bilateral basis between banks.
• In Q1 2021, the number and value of direct debits processed totalled 2,725,530 direct debits processed, with a value of VND 1,210,496. In Q4 2020, there were 2,637,471 direct debits processed with a value of
  VND 1,537,402 billion.

• The cheque is not a commonly used cashless payment instrument.
• Intracity/intra-province cheque payments are cleared by provincial payment centres operated by the SBV. Funds are typically available within three days.
• Inter-province cheque payments are cleared and settled via the SBV’s National Processing and Settlement Centre. Funds are typically available within seven working days.
• In Q1 2021, 14,410 cheques were processed, with a value of VND 19,548 billion. In Q4 2020, there were 16,228 cheques processed with a value of VND 13,719 billion.

• Payment cards are increasingly popular, especially for retail transactions. Payment card transactions declined in Q1 2021, totalling 123,480,704 with a value of VND 267,850 billion. In Q4 2020, transactions totalled 144,330,517 with a value of VND 294,294 billion.
• There were 96 million domestic payment cards in circulation at the end of Q1 2021 (94 million at end Q4 2020).
• Most payment cards are issued by Agribank, Vietcombank and Vietinbank.
• The Vietnam Bank Card Association, in collaboration with the National Payment Corporation of Vietnam and seven commercial banks, launched the first ATM domestic chip cards in 2019. 
• Vietnam National Financial Switching (NAPAS) is Vietnam’s national payment card operator, and the main debit card in the country. All card-issuing institutions in Vietnam are members.
• All ATM cards issued are EMV-compliant.

• There were 19,714 ATMs in Vietnam at the end of Q1 2021.
• There were 271,727 terminals in Vietnam at the end of Q1 2021.
• The majority of payments are settled via NAPAS.
• Payments can also be settled via Smartlink, Vietnam Bank Card and Visa, MasterCard and American Express card operators.

• The dominant electronic wallet schemes in Vietnam are pre-paid cards. VinaPay’s MrTopUp service is one of the biggest pre‑paid card distributors in Vietnam.  
• The limit for transactions for an e-wallet is VND 100 million per month.
• E-money payments are settled via the individual schemes.
• There are over a number of digital wallets schemes available in Vietnam, including MoMo, the country’s largest e-wallet by user (20 million), Moca and ZaloPay. There are 32 companies currently licensed to offer e-payment services.

• BNP Paribas Global Trade Solutions (GTS) in Vietnam offers dedicated trade finance support with 2 trade managers. With its extensive product expertise, BNP Paribas GTS in Vietnam has been recognised across the industry.

• Vietnam has signed a number of free trade agreements (FTA), including with Chile, the EU, South Korea, the UK and an economic partnership agreement with Japan.
• ASEAN has signed free trade agreements (FTAs) with Australia, China, Hong Kong, Japan, India, New Zealand and South Korea.
• Vietnam has launched FTA negotiations a number of member states, including with the EFTA, Israel, Pakistan and Ukraine.
• Vietnam is a signatory of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CP-TPP). The CP-TPP came into force in Vietnam January 2019.
• Vietnam is a signatory of the Regional Comprehensive Economic Partnership (RCEP).

Sources: IMF, International Financial Statistics, June 2021.

• Licences from the Ministry of Trade are required when importing motorcycles, guns and bullets.
• Licences may also be required temporarily, subject to quantitative controls imposed by the Ministry of Trade and the Ministry of Planning and Investment.

• Tariff rates are applied via one of three categories: preferential tax rates, special preferential tax rates and ordinary tax rates.
• A 135% tax rates applies to cigarettes and cigars.
• Most types of machinery, equipment and medicine, along with imports from foreign companies covered by Vietnam’s Law on Foreign Investment, are not subject to import tariffs.
• Excise duties are charged on a few items. Rates range from 0% to 40%.

• Foreign exchange purchased in connection with imports must generally be remitted directly to non-resident beneficiaries on the date of purchase.
• Importer foreign currency deposit accounts are permitted to be credited with purchased foreign exchange, pending remittance to non-residents.

• None.

• Prohibited imports are published on a negative list.
• Vietnam prohibits the import of certain items in order to protect fauna and flora, for health and safety or moral reasons, and/or for national security.

• Licences with quotas are required when exporting textile and clothing products, certain minerals, timber products and rice.

• Tariffs are set on certain products such as crude oil, metals, wood products, raw hides and skins.

• None.

• The Vietnam Development Bank, Vietnam’s national export credit agency, provides state supported export credit insurance and financing.
• Export credit insurance and also financing are available from private companies.

• Prohibited exports are published on a negative list.

• Exchange controls are administered by the SBV.
• All monetary payments must be made in VND. Exceptions apply to payments for exports and payments for goods and services purchased from institutions authorised to receive foreign currency.
• Import or export of VND banknotes by individuals with a value over
  VND 15 million or foreign currency banknotes with a value above USD 5,000, must be declared to the Vietnamese customs authority.
• Credit institutions are permitted to carry out forward and swap transactions in VND and foreign currencies, with maturities ranging from three days to one year.
• Non-residents usually require SBV authorisation to carry out foreign exchange transactions in Vietnam.
• Resident entities must immediately repatriate all proceeds from exports and invisible transactions.
• Residents are permitted to issue debt securities abroad, although prior approval from the relevant regulatory authority is required. Residents are not permitted to buy debt securities from abroad. Non-residents are not permitted to issue debt securities in Vietnam or to sell equities.
• Investors in Vietnam must get approval from government, the Ministry of Planning and Investment (MPI) or the Provincial People’s Committee. Foreign companies and partners must also open a foreign currency account with an authorised bank that will process all capital transactions.
• Investment from Vietnam by resident entities requires a permit from the MPI. Transactions have to be routed via a dedicated account that is registered with the SBV and held with an authorised foreign exchange bank.
• Indirect investment by non-residents must be carried out in VND. Any foreign currency used in non-residents’ indirect investment must be converted into VND before the investment can take place. Foreign indirect investment by a non-resident entity must be done through an indirect investment account opened at a bank licensed in Vietnam.
• Non-residents are not permitted to sell or issue bonds or other debt securities in Vietnam.
• As a member of the Association of Southeast Asian Nations (ASEAN), Vietnam is a participant in the ASEAN Swap Arrangement and the Bilateral Swap Arrangements under ASEAN+3.

• Under the CIT regulations, turnover in respect of derivative financial services should be determined as proceeds from the provision of such services (e.g. by brokers/banks) and performed within any tax assessment period.

• The interest deductibility cap increased from 20% to 30% of EBITDA with regard to a net interest amount as of 24 June 2020.
• The new decree will be applied for the 2019 payable corporate income tax and retroactive for 2017 and 2018.

• Vietnamese CIT regulations stipulate that all realised gains/losses, and unrealised gains/losses on accounts payable, are treated as taxable/deductible.
• Other unrealised foreign exchange gains or losses are non-taxable and non-deductible.

• Advance tax rulings are available from the local and national tax authorities. An enterprise can submit an official application to the tax authorities for a ruling clarifying specific tax concerns.

• Generally, capital gains made by an enterprise in Vietnam will form part of the taxable income of the enterprise, and will be taxed at the standard CIT rate of 20%.
• The transfer value is based on the actual price according to the transfer contract. A deemed fair market value will be used if no contract price is available or if the price stated in the contract is deemed to be not at arm’s length.

• A withholding tax of 5% (corporate tax) and 5% (VAT) generally applies to technical service fees paid to a non-resident. The corporate tax may be exempt under a tax treaty.

• Vietnam has tax treaties with nearly 80 countries.

• For entities with related party transactions, the deductibility of total net interest expense from related and unrelated transactions is capped at 30% of EBITDA. No-deductible interest can be carried forward for five years.

• Vietnam has transfer pricing rules that generally follow the OECD guidelines.
• Contemporaneous documentation is required under the rules that generally follow the BEPS 13 recommendations. The tax authorities can adjust profits if the pricing strategy is found not to be at arm’s length.
• Transfer pricing rules also incorporate the ‘substance over form’ principle, leading to certain types of related-party expenses being regulated as non-deductible for corporate income tax purposes.
• Advanced pricing agreements are available.

• Stamp duties are of 0.5% to 15% assessed on the transfer of housing and land (i.e. certain types of buildings and land), means of transportation (i.e. all types of motorised vessels/boats, automobiles and motorcycles), shotguns and sporting guns.

• Vietnam has no specific tax rules regarding cash pooling arrangements.

Tax issues with cash concentration

• Foreign exchange controls are applicable in Vietnam. The Vietnamese dong (VND) is not easily convertible.
• Inward and outward remittances (e.g. of investment capital, profits, payment of loan interest, etc.) must be effected via foreign currency accounts opened at authorised credit institutions.
• Foreign companies may open an offshore bank account for specific purposes, such as for servicing medium or long-term loans with foreign lenders, with the prior approval of the State Bank of Vietnam.

• Vietnam has no specific taxes applying to financial transactions and/or banking services.

All tax information supplied by Deloitte Touche Tohmatsu and Deloitte Highlight 2020. (www.deloitte.com).