The provision of financial services, including in particular lending, is exempt from VAT (exemption without credit) in Vietnam. However, in Letter No. 1606/TCT-DNL, addressed to the provincial tax offices on 22 April 2020, the General Department of Taxation took the position that the service of providing banking clients with a letter of credit for their commercial operations is not a lending service but a payment facilitation service. Consequently, fees charged by financial institutions for the supply of letters of credit are subject to VAT at the rate of 10%. The position appears to be based on the definition of various...