Tax break for global sovereign bonds
Tax break for global sovereign bonds
The Vietnamese Government has exempted international bonds issued in 2014 from income tax to make the country's global sovereign bonds more attractive to foreign investors.
The exemption is contained in Resolution No.78/NQ-CP, which was released last November 1. It specifies that sovereign bonds issued in the international market this year will no longer be charged for corporate and personal income tax.
It also requires the Ministry of Finance to include the granting of the exemption in the prospectus and related documents for investors.
However, a senior analyst at VPBank Securities Company said this decision would have minimal impact on foreign investors, the prospective buyers of Vietnamese sovereign bonds, as they were required to pay tax in their home countries but not in Viet Nam.
Instead, investors will pay more attention to the country's plans of improving revenue and long-term economic growth.
Viet Nam plans to raise US$1 billion from sovereign bonds by holding roadshows in Singapore, Hong Kong and London, as well as in Boston, New York and San Francisco from October 29 to November 5.
This is the third time the Government has issued sovereign bonds, which are expected to be swapped with debts due next year.
According to Nguyen Van Nen, Minister and Head of Government Office, a bond issue now could help reduce payable interest.
"This debt was borrowed at a high interest rate, but now the Government can have access to a similar loan at lower interest rates. Thus, though the amount of debt is unchanged, we could reduce the interest payable," Nen said at a meeting last August.
Early this week, Fitch Ratings upgraded Viet Nam's sovereign ratings by one notch from B+ to BB-, three notches below investment level, citing improvements in the economy and stronger finances.
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