Is income from capital transfer subject to value added tax?

Based onPoint d Clause 8 Article 4 Circular 219/TT-BTC Regulations on subjects not subject to value added tax, including financial services, banking, and securities trading:

Subjects not subject to VAT

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

a) Credit extension services include the following forms:

- Loans;

- Discount, rediscount of negotiable instruments and other valuable papers;

- Bank guarantee;

- Financial leasing;

- Issuing credit cards.

In case a credit institution collects fees related to credit card issuance, the fees collected from customers belong to the credit granting service process (card issuance fee) according to the credit institution's lending regulations. For customers, such as early repayment fees, late payment penalties, debt restructuring, loan management and other fees in the credit granting process are not subject to VAT.

Common card transaction fees that are not part of the credit granting process such as fees for reissuing pin codes for credit cards, fees for providing copies of transaction invoices, fees for claiming reimbursement when using the card, and fees for reporting theft , lost credit card, credit card cancellation fee, credit card conversion fee and other fees subject to VAT.

- Domestic factoring; International factoring for banks licensed to make international payments;

- Sale of loan security assets by credit institutions or judgment enforcement agencies in accordance with the law on handling loan security assets.

In case the debt repayment period expires, the person with the secured assets is unable to repay the debt and must hand over the assets to the credit institution so that the credit institution can handle the loan security assets according to the provisions of law. The parties then carry out the procedures for handing over the secured assets according to regulations.

In case the parties agree that the person with the secured assets will sell the secured assets to repay the debt, if the person with the secured assets is a VAT payer and the assets being sold are subject to VAT, they must declare, Pay VAT according to regulations.

In case a credit institution receives collateral to replace debt repayment obligations, the credit institution shall account for the increase in asset value to serve production and business according to regulations. When a credit institution sells assets for business activities, if the assets are subject to VAT, the credit institution must declare and pay VAT according to regulations.

- Credit information provision services are provided by units and organizations under the State Bank to credit institutions for use in credit granting activities according to the provisions of the State Bank Law.

- Other forms of credit as prescribed by law.

b) Individual lending activities, not regular business or supply activities of taxpayers who are not credit institutions.

c) Securities business includes: Securities brokerage, securities trading, securities underwriting, securities investment consulting, securities depository, securities investment fund management, company management securities investment, securities investment portfolio management, market organization services of a stock exchange or securities trading center, services related to securities registered and deposited at the Depository Center Registering Vietnam Securities, lending money to customers to perform margin transactions, advance money from securities sales and other securities business activities in accordance with the provisions of securities law.

Activities of providing information, organizing auctions of shares of issuing organizations, and providing technical support for online securities transactions of the Stock Exchange.

d) Capital transfer includes the transfer of part or all of the capital invested in another economic organization (regardless of whether or not a new legal entity is established), transfer of securities, transfer of rights Capital contribution and other forms of capital transfer according to the provisions of law, including cases of selling an enterprise to another enterprise for production and business purposes and the purchasing enterprise inherits all rights and obligations of the selling enterprise under provisions of law.

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Thus, income from capital transfer activities is income not subject to VAT, including:

+ Transfer of part or all of the investment capital to an economic organization.

+ Transfer of securities

+ Transfer of capital contribution

+ Selling businesses to other businesses for production and business.