From January 1, 2026, what is the revenue for household businesses and individual businesses to pay VAT in Vietnam?

From January 1, 2026, what is the revenue for household businesses and individual businesses to pay VAT in Vietnam?

Based on Clause 25, Article 5 of the Law on Value Added Tax 2024 (effective from July 1, 2025) which stipulates the subjects exempt from VAT as follows:

Subjects exempt from VAT

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23. Export products which are natural resources, minerals extracted that have not been processed into other products, and export products which are natural resources, minerals extracted and processed into other products according to the List prescribed by the Government of Vietnam consistent with the state's orientation on discouraging the export, limiting the export of raw natural resources, and minerals.

24. Artificial products used to replace human body parts of patients, including products implanted permanently in the human body; crutches, wheelchairs, and other specialized equipment for people with disabilities.

25. Goods and services of households, individuals engaging in production and business activities with annual revenue up to 200 million VND; assets of non-business organizations or individuals not subject to VAT when sold; national reserve goods sold by the national reserve agency; fees, charges as prescribed by the law regarding fees and charges.

26. Imported goods in the following cases:

a) Gifts for state agencies, political organizations, socio-political organizations, socio-political-professional organizations, social organizations, socio-professional organizations, units of the people's armed forces within the tax-free limit as prescribed by the foreign trade policy and customs regulations;

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Additionally, according to Article 18 of the Law on Value Added Tax 2024 stipulating the effective date as follows:

Effective Date

1. This Law shall take effect from July 1, 2025, except as provided in Clause 2 of this Article.

2. The provision regarding the revenue level of household businesses, and individuals engaging in production and business activities subject to VAT exemption under Clause 25, Article 5 of this Law, and Article 17 of this Law shall be effective from January 1, 2026.

3. 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, shall cease to be effective from the date this Law takes effect.

Thus, according to the above stipulations, from January 1, 2026, household businesses and individual businesses with revenue above 200 million VND must pay VAT. In cases where household businesses and individual businesses have revenue of 200 million VND or less, they are not required to pay VAT.

From January 1, 2026, what is the revenue for household businesses and individual businesses to pay VAT in Vietnam? (Image from Internet)

What goods and services are subject to a 5% VAT rate in Vietnam according to the Law on Value Added Tax 2024?

According to Clause 2, Article 9 of the Law on Value Added Tax 2024, goods and services subject to a 5% VAT rate include:

- Clean water for production and living activities, excluding bottled water, canned water, and other beverages;

- Fertilizers, ores for fertilizer production, plant protection products, and animal growth stimulants as prescribed by law;

- Land leveling, ditch dredging, and pond embanking services for agricultural production; cultivating, caring, and pest control for plants; preliminary processing and preservation of agricultural products;

- Products of planted trees, cultivated forests (excluding wood and bamboo shoots), livestock, aquaculture, and not yet processed into other products or only through normal preliminary processing, excluding products specified in Clause 1, Article 5 of Article 9 of the Law on Value Added Tax 2024;

- Rubber latex in the form of crepe rubber, sheet rubber, latex concentrate, rubber threads; nets, cords, and yarns for knitting fishing nets;

- Products made from jute, sedge, bamboo, rattan, leaves, straw, coconut shells, coconut fiber, water hyacinth, and other handicrafts produced using agricultural by-products; carded and combed cotton; newsprint paper;

- Fisheries exploitation vessels at sea; specialized machinery and equipment for agricultural production as prescribed by the Government of Vietnam;

- Medical equipment as prescribed by legislation on the management of medical equipment; epidemic and disease prevention and treatment drugs; medicinal substances, and materials for the manufacture of epidemic and disease treatment drugs;

- Equipment for teaching and learning, including models, drawings, boards, chalk, rulers, and compasses;

- Traditional and folk-performing arts activities;

- Children's toys; all types of books, except those specified in Clause 15, Article 5 of the Law on Value Added Tax 2024;

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

- Selling, leasing, and leasing social housing as prescribed by the Housing Law.

What are the conditions to deduct input value-added tax in Vietnam from July 1, 2025?

Based on Clause 2, Article 14 of the Law on Value Added Tax 2024 effective from July 1, 2025, the conditions for deducting input VAT are:

- Having a VAT invoice for the purchase of goods and services or VAT payment voucher at the import stage or VAT payment voucher on behalf of the foreign side as prescribed in Clauses 3 and 4, Article 4 of the Law on Value Added Tax 2024. The Minister of Finance shall regulate the VAT payment vouchers on behalf of the foreign side;

- Having non-cash payment documents for purchased goods and services, except certain specified cases under the regulations of the Government of Vietnam;

- For exported goods and services, in addition to the conditions specified at points a and b of this clause, it is also required to have: a contract signed with the foreign party about selling, processing goods, providing services; sales invoices, service provision invoices; non-cash payment documents; customs declarations for exported goods; packing lists, waybills, and insurance documents (if any). The Government of Vietnam shall stipulate conditions for deduction in the case of exporting goods through overseas e-commerce platforms and some other specific cases.