Are construction insurance policies subject to value-added tax in Vietnam from July 1, 2025?

Are construction insurance policies subject to value-added tax in Vietnam from July 1, 2025?

Based on Clause 8, Article 5 of the Law on Personal Income Tax 2024, specific provisions on non-taxable subjects are as follows:

Non-taxable subjects

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6. Irrigation services for agriculture; plowing and harrowing services; dredging services in-field canals serving agricultural production; agricultural product harvesting services.

7. Land use right transfer.

8. Life insurance, health insurance, student insurance, other human-related insurance services; livestock insurance, crop insurance, other agricultural insurance services; insurance for ships, boats, equipment, and other necessary tools directly serving the fishing industry; re-insurance; construction insurance, oil and gas equipment, oil tankers with foreign nationality hired by foreign oil and gas contractors or subcontractors to operate in the Vietnamese sea area, overlapping sea areas where Vietnam and adjacent or opposite coastal countries have agreed to put under joint exploitation policies.

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Thus, under the above regulation, construction insurance is not subject to value-added tax from July 1, 2025.

Are construction insurance policies subject to value-added tax in Vietnam from July 1, 2025? (Image from Internet)

When is the time for determining VAT according to the Law on Value-Added Tax 2024?

Based on Article 8 of the Law on Value-Added Tax 2024 (effective from July 1, 2025), specific regulations on the time for determining VAT are as follows:

[1] The time for determining value-added tax is regulated as follows:

- For goods, it is the time of transferring ownership or the right to use the goods to the buyer or the time of issuing the invoice, regardless of whether money has been collected or not;

- For services, it is the time of completing the service provision or the time of issuing the service provision invoice, regardless of whether money has been collected or not.

[2] The time for determining value-added tax for the following goods and services is regulated by the Government of Vietnam:

- Exported goods, imported goods;

- Telecommunication services;

- Insurance business services;

- Electricity supply activities, electricity production activities, clean water activities;

- Real estate business activities;

- Construction, installation activities, and oil and gas activities.

Which entity is liable to pay value-added tax in Vietnam?

Based on Article 4 of the Law on Value-Added Tax 2024, specific regulations on VAT taxpayers are as follows:

- Organizations, households, and individuals producing, trading goods, services subject to value-added tax (hereinafter referred to as business establishments).

- Organizations and individuals importing goods subject to value-added tax (hereinafter referred to as importers).

- Organizations and individuals producing, trading in Vietnam that purchase services (including services associated with goods) from foreign organizations without permanent establishments in Vietnam, and individuals overseas that are non-resident in Vietnam, except for cases specified in Clauses 4 and 5, Article 4 of the Law on Value-Added Tax 2024; organizations producing, doing business in Vietnam purchasing goods, services for searching, exploring, developing oil and gas fields, and exploiting oil and gas of foreign organizations without permanent establishments in Vietnam, individuals overseas that are non-resident in Vietnam.

- Foreign suppliers without permanent establishments in Vietnam conducting e-commerce business, based on digital platforms with organizations, individuals in Vietnam (hereinafter referred to as foreign suppliers); organizations are foreign digital platform managers that deduct taxes, paying on behalf of the tax obligations of foreign suppliers; organizations doing business in Vietnam applying VAT calculation method being the deduction method purchasing services from foreign suppliers without permanent establishments in Vietnam through e-commerce channels or digital platforms shall deduct, pay on behalf of the tax obligations of foreign suppliers.

- Organizations are managers of e-commerce exchanges, managers of digital platforms with payment functionalities deduct taxes, paying on behalf and declaring deducted taxes for business households, individuals doing business on e-commerce exchanges, and digital platforms.

When does the Law on Value-Added Tax 2024 take effect in Vietnam?

Based on Article 18 of the Law on Value-Added Tax 2024, specific provisions on the effective date are as follows:

Effective date

1. This Law takes effect from July 1, 2025, except for the case specified in Clause 2 of this Article.

2. The provision on the turnover level of households and individuals producing and doing business exempt from tax as prescribed in Clause 25, Article 5 of this Law and Article 17 of this Law takes effect from January 1, 2026.

3. The Law on Value-Added Tax No. 13/2008/QH12, which has been amended and supplemented by Law No. 31/2013/QH13, Law No. 71/2014/QH13, and Law No. 106/2016/QH13, ceases to be effective from the date this Law takes effect.

Thus, under the above regulation, the Law on Value-Added Tax 2024 takes effect from July 1, 2025.