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OFFICIAL LETTER 7371/CT-QLNT  ON THE VAT POLICY APPLICABLE TO BY-PRODUCTS OF ORDINARILY PRELIMINARILY PROCESSED WOOD

On 05 October 2026, the Department of Taxation issued Official Letter 7371/CT-QLNT providing guidance on the VAT policy applicable to by-products arising from wood processing, based on the specialised opinion of the Department of Forestry and Forest Protection (Ministry of Agriculture and Environment).

The main points of guidance are as follows:

Determination of ordinarily preliminarily processed wood products: By-products arising from wood processing, such as sawdust, bark, offcuts, slabwood, wood shavings and similar by-products, including those containing wood preservatives and wood adhesives, are determined to be ordinarily preliminarily processed wood in accordance with the guidance in Official Letter 2362/LNKL-SDR dated 13 August 2026.

VAT policy applicable from 01 January 2026

Based on the above classification, the Department of Taxation provides guidance on the consistent application of the VAT policy in accordance with Official Letter 4582/BTC-CST of the Ministry of Finance and Official Letter 3546/CT-CS of the Department of Taxation. Accordingly, the determination of VAT obligations must be based on the nature of the product, the origin of the goods and the stage of business. For plantation wood products that have undergone only ordinary preliminary processing, the application of the tax policy must distinguish between the stage of self-production for sale and the commercial trading stage as prescribed. Specifically:

  • Not subject to VAT: For products self-produced and sold by organisations and individuals, and at the importation stage.
  • Not required to declare and pay VAT: For enterprises, cooperatives and unions of cooperatives applying the credit method that purchase the products for sale to other enterprises, cooperatives or unions of cooperatives at the commercial trading stage. This provision also applies where the purchaser carries out further processing steps but the products sold are still determined to be ordinarily preliminarily processed wood.

Subject to the 10% VAT rate: For enterprises, cooperatives and unions of cooperatives applying the credit method that sell the products at the commercial trading stage to business households, business individuals or other organisations and individuals.