Vietnamese derivatives need tax incentives

Author: Lizzie Meager | Published: 30 Aug 2017

Derivatives began trading in Vietnam this month as authorities work to boost investment in the local capital markets. While the move is undoubtedly positive, their tax treatment needs to be improved  for the market to grow.

The new market is at the moment made up of futures contracts based on the VN30 index, which tracks the performance of the country’s 30 largest companies. These account for around 70% of total market cap, according to Saigon Securities – but the legal framework also allows for derivatives based on government bonds, currency and commodities and listed shares in future.

The market is based on companies listed on the Ho Chi Minh City stock exchange

While both licensed Vietnamese banks and local branches of foreign banks were already permitted to trade derivatives in the country, activity was incredibly limited and cross-border deals with offshore counterparties were subject to approval from the State...