Key updates on cross-border payments for foreign businesses in Vietnam

The Southeast Asian (SEA) payment landscape is in a state of rapid transformation. As a hub for foreign direct investment and a dynamic market, Vietnam is a key node in this regional shift. For international businesses looking to solidify their presence or expand operations into Vietnam, understanding the nuances of the evolving cross-border regulatory environment is no longer optional, it’s crucial for sustainable growth.

At 9Pay, we understand that regulatory clarity is the bedrock of secure and efficient financial operations. This analysis provides a concise overview of the latest developments in cross-border payments across SEA, with a focus on compliance (AML/KYC) and tax policies that directly impact your transactions into and out of Vietnam.

ASEAN's push for regional payment connectivity

The overarching theme in SEA is the accelerated drive towards regional payment interoperability. Initiatives like the ASEAN Regional Payment Connectivity (RPC) are moving from vision to reality, underpinned by central bank agreements to link local payment systems.

- Key data point: This connectivity aims to simplify retail and wholesale cross-border payments, potentially bypassing traditional, costly correspondent banking routes. A major focus is the QR Code linkage between countries like Vietnam, Thailand, Singapore, Malaysia, and Indonesia, which is rapidly being established for retail transactions. For your business, this translates to faster, lower-cost B2C payment collection and disbursement within the region.

- Implication for Vietnam: Vietnam’s participation in these bilateral and multilateral linkages signals a commitment to global financial integration. This creates an environment ripe for payment service providers (PSPs) like 9Pay to offer streamlined, real-time settlement solutions that leverage these official channels.

Regulatory deep dive - AML/KYC & enhanced scrutiny

Regulatory bodies across SEA, in alignment with global standards set by the Financial Action Task Force (FATF), are significantly tightening their Anti-Money Laundering (AML) and Know Your Customer (KYC) frameworks, particularly for cross-border and Digital Payment Token (DPT) services.

Focus on AML/CFT compliance

- Singapore's leadership: As a major regional financial center, Singapore’s recent amendments to the Payment Services Act (PS Act), which took effect in stages from April 2024, are setting a high bar. These changes expanded the scope of regulated activities, including custodial services for DPTs and introduced new requirements for the safeguarding of customer assets. This increased rigor in a leading jurisdiction tends to influence best practices across the region.

- Vietnam’s position: Vietnam is actively refining its framework. With the adoption of new financial technology like Stablecoin and the exploration of a regulatory Sandbox, the government is laying the groundwork for innovation while maintaining control. Compliance with FATF guidelines remains a priority, which means businesses dealing with Vietnamese partners must adhere to Enhanced Customer Due Diligence (ECDD), meticulous record-keeping, and robust suspicious transaction reporting.

- Your action point: For foreign enterprises, choosing a local PSP that uses automated, real-time KYC/AML screening and can furnish transparent compliance reports is paramount. This ensures your operations remain compliant with both local Vietnamese law and international standards.

Tax and legal landscape, new considerations for cross-border transactions

The sheer volume of digital and e-commerce transactions flowing into SEA necessitates clearer and more consistent tax policies. While specific country tax rates vary, the trend is toward ensuring effective taxation of the digital economy.

The global digital tax shift: Countries are increasingly implementing or proposing VAT/GST on digital services supplied by foreign providers to local consumers. This is a key area of focus for tax authorities, ensuring that cross-border e-commerce activities are fully captured.

Vietnam’s Tax Environment: While Vietnam continues to offer an attractive corporate tax environment, legal certainty around cross-border transactions is improving. Businesses engaging in trade must stay current on the effective Foreign Contractor Tax (FCT) regulations, which apply to foreign entities earning income in Vietnam under various forms of contracts.

The Need for Clarity: The complexity often lies in correctly categorizing and withholding the appropriate tax amount for different types of cross-border service payments (e.g., royalties, service fees, interest). A reliable local partner can help you navigate these nuances, ensuring accurate withholding and reporting to the Vietnamese tax authorities, thereby minimizing audit risk.

9Pay’s commitment - your trusted local partner for cross-border success

The confluence of technological innovation and regulatory evolution presents both opportunities and compliance challenges.

At 9Pay, we are a licensed Payment Intermediary by The State Bank of Viet Nam operating at the forefront of Vietnam’s Fintech evolution. Our platform is built not just for speed and efficiency, but on the bedrock of rigorous compliance:

- Real-time compliance: We integrate the latest Vietnamese and regional AML/KYC guidelines into our proprietary transaction monitoring systems, protecting your business from financial crime risks.

- Local expertise, global standards: Our team provides clarity on Vietnamese FCT and regulatory reporting requirements, ensuring your cross-border transactions are fully compliant from a legal and tax perspective.

- Seamless integration: We offer streamlined APIs and local currency settlement services that leverage the new regional connectivity initiatives, making your entry or expansion into the Vietnamese market fast, secure, and cost-effective.

The future of cross-border payments in SEA is fast, digital, and deeply interconnected. Partner with 9Pay to ensure your business is not only keeping pace with these changes but is positioned to leverage them for maximum advantage.