News and Events

OFFICIALLY APPROVED THE AMENDED VALUE-ADDED TAX LAW

On November 26, 2024, the National Assembly officially approved the new Value-Added Tax (VAT) Law No. 48/2024/QH15. Some key changes in the new VAT law are as follows:

I. Taxpayers

Supplemental provisions for taxpayers:

  • Supplement foreign suppliers without a permanent establishment in Vietnam engaging in e-commerce activities, digital platform-based business, and foreign digital platform operators to perform tax withholding and payment on behalf of the foreign suppliers;
  • Organizations managing e-commerce platforms or digital platforms are required to withhold and pay taxes on behalf of business households and individuals operating on these platforms.

II. Non-taxable objects

2.1 Adjustments to entities not subject to VAT

  • Reduce the number of groups of goods and services exempt from VAT under current regulations, including:
    • Fertilizers; specialized machinery and equipment for agricultural production; offshore fishing vessels;
    • Securities custody; market organization services provided by stock exchanges or securities trading centers; other securities business activities.
  • Amend or supplement guidance on certain goods and services exempt from VAT to eliminate difficulties for businesses and administrative procedures, such as:
    • Remove the regulation on determining the percentage of resources and minerals combined with energy costs accounting for 51% or more of the product cost for exported goods to qualify for VAT rates and refunds, and replace it with a list defined by the Government for exported products processed from exploited resources and minerals, which are not encouraged or restricted for export;
    • Replace “Computer software” with “software products and software services as prescribed by law”;
    • Capital transfer does not include the transfer of investment projects or the sale of asset.

2.2 Raising the revenue threshold for VAT liability for business households and individuals.

The annual revenue threshold for business households and individuals exempt from VAT is increased from 100 million to 200 million according to Clause 25, Article 5 of the 2024 VAT Law.

III. Tax rate

3.1 Tax rate at 0%

  • The draft VAT law proposed by the Ministry of Finance limits the 0% tax rate to certain services consumed abroad (only including the leasing of transport vehicles used outside the territory of Vietnam, and services related to aviation or maritime transport directly used for international transport or through agents). However, the official version maintains that goods and services sold to foreign entities and consumed outside Vietnam are entitled to 0% VAT.
  • Goods sold and services provided directly to organizations in the non-tariff zones and consumed within the non-tariff zones for direct export activities also qualify for the 0% VAT rate. This requirement highlights a restriction on the  scope of activities entitled to 0% VAT.
  • Additional entities applied for the 0% tax rate
    • International transportation.
    • Construction and installation projects abroad or in the non-tariff zones.
    • Goods sold in quarantine areas for individuals (foreigners or Vietnamese nationals) who have completed exit procedures; goods sold at duty-free shops.
    • Export services including:
  • Applicable to the leasing of transport vehicles used outside territory of Vietnam.
  • Services of the aviation, maritime industries provided directly or through agents for international transportation.

3.2 Tax Rate at 5%

Certain products currently exempt from VAT will now be subject to the 5% tax rate

  • Fertilizers, specialized machinery and equipment for agriculture
  • Fishing vessels operating in marine areas

3.3 Tax Rate at 10%

Reclassification of securities custody services from VAT-exempt to subject to VAT rate at 10%.

Reclassification of products currently taxed at a 5% VAT rate will be reclassified to 10%

  • VAT rate applicable to foreign suppliers without a permanent establishment in Vietnam who engage in e-commerce or digital platform-based business activities with organizations or individuals in Vietnam. This regulation will increase VAT costs for foreign suppliers.
  • Unprocessed forestry products
  • Sugar; by-products in sugar production, including molasses, bagasse, and sludge
  • Specialized equipment and tools for teaching, research, and scientific experiments
  • Cultural, exhibition, physical education, and sports activities; artistic performances, film production; importation, distribution, and screening

IV. Taxable Price

4.1 Amendment to the regulations on taxable price for imported goods

  • The taxable price for imported goods is defined as:

Taxable price for imported goods = the taxable value for import duty as prescribed by Law on Export and Import duties + Import duties, additional taxes (if any) + Environmental protection tax (if any).

Compared to the 2008 VAT Law, the 2024 VAT Law includes import duties and environmental protection tax to be included in the tax price of imported goods (if any).

4.2 Supplement to the tax price of goods and services used for sales promotion

  • The 2024 VAT Law specifies that the taxable price for goods and services used for promotion is zero (0) VND per commercial law provisions.

V. Time for Determining VAT liabilities

The law supplements the time for determining VAT on goods (besides the time for determining VAT as at the time of ownership or usage rights transfer, the time of issuing invoices is added).

VI. Tax Declaration, Deduction, and Refund

6.1 VAT declaration for omitted invoices

Input VAT incurred in a specific month must be declared and deducted in the same month. If a business discovers omitted input VAT invoices or tax payment documents, they can declare and deduct these in the period when the omission is identified, provided it is before the tax authority announces an audit or inspection decision.

6.2 Amendment to VAT input tax deduction conditions not previously stipulated

The cash payment threshold is removed. Specifically:

Purchase of goods and services under 20 million VND must have non-cash payment vouchers, except for certain cases prescribed by the Government.

Previously, according to Clause 2, Article 12 of the current 2008 VAT Law, goods and services purchased for less than 20 million VND per transaction did not require non-cash payment documents for VAT deduction.

Additional deductible input VAT supporting documents

According to point c, Clause 2, Article 14 of the 2024 VAT Law, enterprises are allowed to deduct input VAT for exported goods and services if enterprises are allowed to deduct input, except for special cases prescribed by the Government.

This provision had not been previously regulated.

6.3 VAT Refunds

  • The law allow VAT refunds for investment expansion projects during the investment stage  if the  accumulated input VAT is VND300 million or more.
  • The refund period for businesses with investment projects is no more than one year from the completion date of the investment phase/project.
  • Revised VAT refund rules to benefit taxpayers in specific cases, such as such as those producing goods/services subject to 5% VAT, investment projects in  conditional sectors or with incomplete  charter capital, and exported goods/services.
  • The regulation on VAT refunds related to ownership transfers, business transformations, mergers, consolidations, or divisions are no longer applicable.

The Value Added Tax Law No. 48/2024/QH15 takes effect from July 1, 2025, except for the following provisions:

  • The Provisions on revenue thresholds for households and individual producers/businesses exempt from VAT in Clause 25, Article 5 of the 2024 VAT Law and Article 17 of the 2024 VAT Law, effective from January 1, 2026.
  • The 2008 VAT Law, as amended by the VAT Amendment Laws of 2013, 2014, and 2016, will cease to be effective once the 2024 VAT Law comes into force.