Are there the Draft Law on Amendments to Law on VAT 2024 of Vietnam?
Are there the Draft Law on Amendments to Law on VAT 2024 of Vietnam?
The Law on Value Added Tax 2024 was officially ratified by the National Assembly on the afternoon of November 26, 2024.
Currently, there is no official announcement decree for the Law on Value Added Tax 2024. As the Draft Law on Amendments to Law on VAT has just been passed, there is still no official legal document.
However, the latest Draft Law on Amended Value Added Tax 2024 can be referenced...Download to learn more about the new policies and updates regarding the Law on Amendments to Law on VAT 2024.
Are there the Draft Law on Amendments to Law on VAT 2024 of Vietnam? (Image from Internet)
What are the new regulations of the Draft Law on Amendments to Law on VAT 2024 in Vietnam?
The new points of the Draft Law on Amendments to Law on VAT 2024 are aggregated based on the Draft Law on Value Added Tax 2024 as follows:
(1) Adjusting Items Not Subject to VAT
Article 5 of the Draft Law on Amendments to Law on VAT 2024 adjusts the regulations on items not subject to VAT as per Article 5 of the Law on Value Added Tax 2008 (amended by Law No. 31/2013/QH13 and Law No. 106/2016/QH13) as follows:
- Removing certain items from the non-VAT applicable list
Certain items currently not subject to VAT will be removed, including:
Fertilizer; specialized machinery and equipment for agricultural production; offshore fishing vessels;
Securities depository; services organizing the market of stock exchanges or securities trading centers; other securities trading activities...
- Export products being processed from resources, minerals must comply with the List prescribed by the Government of Vietnam for VAT applications.
Previously, export products processed from resources and minerals with a total value of resources, minerals combined with energy costs accounting for 51% of the product's cost or more were eligible for non-VAT status.
- Adding imported goods donated or sponsored for disaster prevention, disease, war as determined by the Government of Vietnam as non-VAT applicable.
(2) Amending Tax Calculation Rules for Imported Goods
Currently, Article 7 of the Law on Value Added Tax 2008 stipulates that the taxable price for imported goods is the import price at the border plus import tax (if any), plus special consumption tax (if any) and environmental protection tax (if any). The import price at the border is determined by the rules for calculating tax on imported goods.
According to Article 7 of the Draft Law on Amendments to Law on VAT 2024, the taxable value for imported goods is the customs value, as per the rules on export and import taxes plus import tax, and any additional import-related taxes (if any), plus special consumption tax (if any) and environmental protection tax (if any).
(3) Adding Tax Calculation for Promotional Goods and Services
Article 7 of the Draft Law on Amendments to Law on VAT 2024 adds a provision: The taxable value for promotional goods and services as per commercial law is zero.
(4) Adjusting Tax Rates for Certain Goods and Services
Article 9 of the Draft Law on Amendments to Law on VAT 2024 adjusts the tax rates for certain goods and services as follows:
1. Adding Some Subjects for 0% Tax Rate
- International transportation;
- Construction and installation projects abroad, in free trade areas;
- Goods sold in the restricted area to individuals (foreigners or Vietnamese) who have completed exit procedures; goods sold in duty-free shops;
- Export services provided to overseas organizations, individuals, including transportation rental services used outside the territory of Vietnam; aviation and maritime services supplied directly to international transportation or through an agent.
2. Products Not Subject to VAT Changed to 5%
- Fertilizer;
- Offshore fishing vessels;
- Various agricultural vehicles and machinery for plowing, harrowing, plowing fields, planting seeds, etc.;
- Harvesting machines for rice, corn, sugarcane, coffee, cotton, roots and tubers, and more;
- Machinery for post-harvest processing, agricultural drying, etc., as specified by the Government of Vietnam.
3 Products Subject to 5% VAT Changed to 10%
- Unprocessed forestry products;
- Sugar and by-products in sugar production, including molasses, bagasse, mud sludge;
- Specialized teaching, research, experiment equipment, and tools;
- Cultural, exhibition, physical education, sports activities; performing arts; film production, import, and screening.
(5) Changing Conditions for Deducting Input VAT
1. Purchases of Goods and Services Below 20 Million Dong Must Have Non-Cash Payment Evidence
Previously, for purchases of goods and services below 20 million Dong, there was no need for non-cash payment evidence to deduct VAT as per clause 2 Article 12 of the Law on Value Added Tax 2008.
However, according to clause 2 Article 13 of the Draft Law on Amendments to Law on VAT 2024, all purchases of goods and services must have non-cash payment evidence, except in special cases specified by the Government of Vietnam.
2. Adding Some Documentation Eligible for Input VAT Deduction
According to clause 2 Article 13 of the Draft Law on Amendments to Law on VAT 2024, export goods and services related documents such as packing lists, bills of lading, and insurance certificates (if any) are eligible for input VAT deduction, except in special cases prescribed by the Government of Vietnam.
This content was not previously regulated.
(6) Adding New Tax Refund Scenarios
Article 14 of the Draft Law on Amendments to Law on VAT 2024 adds the following scenarios eligible for tax refund:
Business establishments only producing goods, providing services that are subject to a 5% VAT rate, if they have undeducted input VAT from 300 million Dong or more after 12 months or 4 quarters, they will be eligible for VAT refund.
See the latest Draft Law on Amendments to Law on VAT 2024...Download
Who are VAT payers in Vietnam under current regulations?
Based on Article 3 of Circular 219/2013/TT-BTC, taxpayers include organizations and individuals producing and trading in VAT-liable goods and services in Vietnam, regardless of business sector, business form (hereinafter referred to as business establishments), as well as organizations and individuals importing goods, purchasing services from abroad subject to VAT (hereinafter referred to as importers) including:
- Business organizations established and registered under the Enterprise Law 2020, Cooperative Law 2023 and other specialized business laws;
- Economic organizations of political entities, socio-political organizations, social organizations, socio-professional organizations, people's armed forces units, non-business organizations, and other organizations;
- Foreign-invested enterprises and foreign parties involved in business cooperation contracts as per the Investment Law; organizations, foreign individuals doing business in Vietnam without establishing a legal entity in Vietnam;
- Individuals, households, independent groups of business individuals, and other eligible entities producing, trading, importing;
- Organizations and individuals in Vietnam purchasing services (including purchasing services associated with goods) from overseas organizations not habitually residing in Vietnam, foreign individuals residing abroad, being non-resident individuals in Vietnam, the entity purchasing the service is the taxpayer, except in cases where declaration, calculation, and VAT payment are not required as guided in clause 2 Article 5 of Circular 219/2013/TT-BTC.
Regulations on habitual establishment and non-resident entities follow the laws on corporate income tax and personal income tax.
- Branches of export processing enterprises established to conduct trading and related activities in Vietnam under the laws on industrial parks, export processing zones, and economic zones.
