Crypto In Vietnam
This blog post will cover:
- Is crypto legal in Vietnam?
- Crypto taxes in Vietnam
Crypto adoption keeps on rising all over the world. Retail and institutional involvement with the industry has never been bigger, and even more governments around the world are finally opening up to the blockchain revolution. Today we’ll be taking a look at the interesting case of Vietnam, the country with the highest crypto adoption rate that still lacks a regulatory framework. Let’s get into it!
Is crypto legal in Vietnam?
Overall, crypto is legal in Vietnam, yet it faces some issues due to various reasons. Let’s find out which ones. The country has an ambiguous past when it comes to regulating digital assets during the last few years. In 2014 Vietnam went as far as banning BTC transactions for business and individuals, only to turnaround the decision in 2017. However, again in 2018 the country banned BTC as a form of payment.
Vietnam lacks any real legal framework of cryptocurrency, however despite it all the country has the highest percentage of crypto holders worldwide. Data from Finder’s crypto ownership report shows that as much as 41% of the population holds cryptocurrency.
The incredible popularity of cryptocurrency in Vietnam has made the government choose a more favorable view on the issue in recent years. In 2020 the government financed and established a crypto research group with the goal of investigating the space and recommending policies to adopt.
Furthemore, the deputy PM La Minh KhaI has just recently instructed the finance ministry to amend laws and build a legal framework for crypto. According to the newspaper Vietnam Net, the operation would also include alongside the Finance ministry the Justice, Information and Communications and the State Bank of Vietnam.
The new policy will develop on “Decision 1255” issued in 2017 that aims to create a legal framework for “virtual assets, digital currencies, and virtual currencies.” So crypto regulation may not be the most favorable in Vietnam as of now, but that may change very soon. Popular demand in Vietnam overwhelmingly asks for a clearer defined legal framework and more favorable regulations.
Crypto taxes in Vietnam
Vietnam has a tax system that differs from most other countries. Instead of taxing profits based either with income or capital gains tax, Vietnam goes a different route setting rules based on employment or non-employment income.
However, the lack of a clear framework for crypto taxes means you should base your calculation depending on what you are doing. Undeniably, crypto taxes are in a gray zone in Vietnam and these are interpretations, so people seeking a clearer picture should check with a Vietnam tax professional.
Swapping or trading your digital assets is not counted as a tax event, however liquidating your digital holdings is. The profits made through the selling of crypto will be counted as non-employment income of business profits.
So staking does not trigger a tax event when it comes to earning crypto rewards from the operation. However, if the crypto reward is sold into fiat it will result in being counted as a non-employment income.
Furthermore due to the crypto not being counted as currency the airdrops may not be counted as interest, as it could be interpreted as a gift so not taxable. Farming and LP earning will however fall into business profits.
The topic becomes even more complicated when it comes to NFTs. Selling an NFT could fall under business income, but different categories may apply if the NFT is used for other activities.
In terms of how much taxes you own, for crypto activities that fall under non-employment income the following rates apply:
- Business Income from 0.5 to 5%
- Interest is taxed 5%
- Royalties are taxes 5%
However, with crypto being in such a gray zone there’s no way of knowing how to calculate the business income rate. Concrete action is needed by the government to well define these rules so that they aren’t up to interpretation.
In an emerging economy like Vietnam, crypto can be a huge opportunity. Vietnam lacks financial infrastructure so by working P2P the blockchain could help bring services such as banking to the whole population. By cutting out the middleman users save on fees and make exchanging a lot more efficient, which would if developed the right way boost economic output.
Vietnam could become a hub for crypto investment in the future. The extremely high adoption rate promises well and if the government adopts a favorable legal framework, it would become a very attractive destination for crypto capital.
If you want to know about more countries adopting crypto, make sure to check out our posts about Germany, South Korea, Brazil, UAE, Australia, Nigeria, Mexico, India, Russia and USA.