Are offshore fishing vessels subject to 5% VAT in Vietnam from July 1, 2025?

Are offshore fishing vessels subject to 5% VAT in Vietnam from July 1, 2025?

Pursuant to the provisions in Clause 2, Article 9 of the Law on Value Added Tax 2024 (effective from July 1, 2025), the 5% tax rate applies to the following goods and services:

Tax Rate

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2. The 5% tax rate applies to the following goods and services:

a) Clean water for production and living purposes, excluding bottled water, canned beverages, and other soft drinks;

b) Fertilizers, ores for fertilizer production, plant protection drugs, and growth stimulants for livestock as prescribed by law;

c) Services of digging, dredging canals and ponds for agricultural production; raising, caring for, and pest controlling for plants; preliminary processing, preserving agricultural products;

d) Products from crops, planted forests (excluding wood, bamboo shoots), livestock, aquaculture, catching unprocessed into other products, or only through preliminary processing, except for products specified in Clause 1, Article 5 of this Law;

đ) Latex in sheets, strips, threads, crumbs; nets, ropes, and yarns for weaving fishing nets;

e) Products made from jute, sedge, bamboo, leaves, straw, coconut husks, coconut shells, water hyacinth, and other handicraft products made from agricultural by-products; raw cotton, carded thoroughly; printing paper for newspapers;

g) Vessels for exploiting aquatic products in marine areas; specialized machinery and equipment for agricultural production as prescribed by the Government of Vietnam;

h) Medical equipment as prescribed by the laws on the management of medical equipment; preventive and curative drugs; pharmaceutical substances and materials for the production of medicinal drugs, preventive drugs;

i) Equipment for teaching and learning, including: models, diagrams, boards, chalk, rulers, compasses;

k) Traditional and folk performing arts activities;

l) Children's toys; all types of books, excluding those specified in Clause 15, Article 5 of this Law;

m) Scientific and technological services as prescribed by the Law on Science and Technology;

n) Sale, lease, and lease purchase of social housing in accordance with the Housing Law.

Currently, based on Clause 3a, Article 5 of the Law on Value Added Tax 2008, supplemented by Clause 1, Article 3 of the Law on Amending the Laws on Taxes 2014, offshore fishing vessels are not subject to VAT.

Therefore, from July 1, 2025, offshore fishing vessels (vessels for exploiting aquatic products in marine areas) transition from being exempt from VAT to being subject to a 5% VAT.

Are offshore fishing vessels subject to 5% VAT in Vietnam from July 1, 2025? (Image from the Internet)

What are regulations on determination of VAT for offshore fishing vessels in Vietnam from July 1, 2025?

The determination of VAT for offshore fishing vessels is stipulated in Article 8 of the Law on Value Added Tax 2024 as follows:

- The point in time to determine VAT for goods is the time of transferring ownership of goods to the buyer or the time of issuing the invoice, regardless of whether the money has been collected or not;

- The point in time to determine VAT for exported goods and imported goods is defined by the Government of Vietnam.

What is the VAT calculation price for offshore fishing vessels in Vietnam from July 1, 2025?

The VAT calculation price for offshore fishing vessels is prescribed in Article 7 of the Law on Value Added Tax 2024 as follows:

(i) For goods sold by business establishments, it is the selling price excluding VAT; for goods subject to special consumption tax, it is the selling price including special consumption tax but excluding VAT; for goods subject to environmental protection tax, it is the selling price including environmental protection tax but excluding VAT; for goods subject to both special consumption tax and environmental protection tax, it is the selling price including both these taxes but excluding VAT;

(ii) For imported goods, it is the customs value for import tax calculation as prescribed by the laws on export tax and import tax plus import tax plus additional taxes as prescribed by the law (if any), plus special consumption tax (if any) and plus environmental protection tax (if any);

(iii) For goods used for exchanges, internal consumption, gifts, or donations, it is the VAT calculation price of goods of the same type or equivalent at the time of these activities.

For promotional goods as stipulated by commercial laws, the tax calculation price is determined as zero (0);

(iv) For asset lease activities, it is the rental amount excluding VAT.

In cases of leasing in installments or paying rent in advance for the lease term, the tax calculation price is the rent amount paid in installments or in advance for the lease term excluding VAT;

(v) For goods sold in installments or deferred payment, it is the price calculated according to the one-time cash selling price excluding VAT, not including installment or deferred payment interest;

(vi) For processing goods, it is the processing price excluding VAT;

(vii) For goods using invoices that state the payment price, which is the price including VAT, the tax calculation price is determined by the following formula:

Price excluding VAT = [Payment Price / (1 + tax rate of goods and services (%))]

Note: The tax calculation price includes any additional fees or surcharges that the business establishment benefits from.