The Ministry of Finance (MoF) has just responded to the proposal of the Vietnam Bank for Agriculture and Rural Development on value-added tax (VAT) policy for the sale of secured assets.
According to a report forwarded by the Ministry of Justice, the bank that draft amendment to the VAT Law clearly stipulate that VAT exemption should be applicable to the sale of collateral assets by credit institutions, enforcement agencies, or borrowers selling on behalf of lenders to repay secured loans.
The bank argued that selling collateral assets is not a regular business activity but a debt recovery measure. Imposing VAT would increase the cost of debt resolution, reduce the attractiveness of the assets when sold, and prolong the debt recovery process.
However, in its response, the MoF stated that the sale of collateral assets is considered a regular sale of goods. Therefore, to ensure the continuity of the VAT system, the sale of such assets is subject to VAT. The Ministry emphasized that all related input VAT will be deductible according to regulations.
The Ministry also clarified that this issue was considered and explained during the drafting of the VAT Law No. 48/2024/QH15.
Thus, only collateral assets handled by state-established debt trading organizations are exempt from VAT. Other cases, including the sale of collateral assets by credit institutions or enforcement agencies, remain subject to VAT to ensure consistency and the input deduction mechanism of the VAT system.
Additionally, the MoF referenced Clause 1, Article 4, and Clause 25, Article 5 of the VAT Law No. 48/2024/QH15, stating that if the collateral assets belong to non-business organizations or individuals not subject to VAT, their sale is also not subject to VAT.
In conclusion, the MoF maintains its stance that the sale of collateral assets by credit institutions and enforcement agencies is subject to VAT to ensure consistency within the tax system and the input deduction mechanism of VAT.
Google translate