Vietnamese securities firms have increased various customer service fees starting July 1, following the implementation of a new Value Added Tax (VAT) law. This measure comes as a 10% VAT is now imposed on certain brokerage services that were previously tax-exempt.

VAT Law Amendments and Expansion of Applicable Services 

VAT Law 48/2024/QH15, passed by the National Assembly in November 2024, newly includes securities deposit, custody, withdrawal, transfer, derivatives clearing, and margin account services as taxable items. Consequently, a number of securities firms, including Saigon-Hanoi Securities (SHS), Viet Dragon Securities (VDSC), Vietcombank Securities (VCBS), and VNDirect Securities, have adjusted their fees for deposit, custody, account transfer, position freezing, derivatives clearing, and margin asset management.

Specifically, SHS has increased custody fees for stocks, fund certificates, and covered warrants from 0.27 VND to 0.297 VND per unit per month. Corporate bond deposit fees have risen from 0.18 VND to 0.198 VND per unit, with the monthly maximum increasing from 2 million VND (approximately $76.44) to 2.2 million VND. Custody withdrawal fees have been raised from 0.2% to 0.22% of the total value, with the minimum fee increasing from 50,000 VND to 55,000 VND, and the maximum fee per transaction from 1 million VND to 1.1 million VND.

VCBS and VDSC have also announced that they will levy an additional 10% VAT on custody services, margin asset management, derivatives clearing, position freezing, and securities transfers starting July 1.

Aim to Resolve Tax Imbalance and Ensure Fairness 

Authorities emphasize that this tax law revision aims to resolve systemic imbalances in tax collection and ensure timely tax payments, particularly from major shareholders or individual shareholders who receive executive perks. From 2016 to 2024, individual income from capital investments amounted to approximately 52 trillion VND, but taxes on dividends and stock-based compensation were only 1.3 trillion VND, accounting for a mere 2.5% of the total taxable income, indicating a significant tax collection gap.

This was compared to international standards, such as Thailand and India, which impose a 10% tax on dividends or bonus distributions. Vietnamese authorities believe that this amendment will ensure fairness in taxation and strengthen discipline in tax administration.

Market Reaction and Investor Concerns 

Market reactions to these fee increases are mixed. Some investors have expressed dissatisfaction with the increased transaction costs. Concerns have been raised, particularly among long-term investors or strategic shareholders, that the obligation to pay immediate taxes upon receiving stock bonuses could disrupt their financial planning and investment cash flow. The strengthening of personal income tax on dividends could also add to investors' burdens.

However, regulatory authorities argue that this amendment, including VAT adjustments and changes to personal income tax payment timing, will promote fairness and discipline in tax administration. In the long run, it is expected to contribute to creating a transparent market environment.

Expert Opinions and Future Outlook 

Securities market experts believe that while these fee increases may have a short-term negative impact on investor sentiment, they will contribute to enhancing the transparency and soundness of Vietnam's capital market in the long run. They analyze that the purpose is to reduce tax evasion that occurred due to low tax rates or tax exemptions in the past and to provide a fair competitive environment for all market participants.

Some experts advise that securities firms should also make efforts to offset investor dissatisfaction by improving service quality or developing new products in addition to fee increases. Furthermore, the government should provide sufficient publicity and education on the revised tax law to minimize investor confusion.

The ultimate impact of these changes on the Vietnamese securities market will only become clear over time. However, the process of finding a balance between the government's intention to strengthen tax collection and market reactions is expected to continue.

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