From July 1, 2025, do offshore fishing vessels have to pay VAT in Vietnam?

From July 1, 2025, are offshore fishing vessels subject to VAT in Vietnam?

Pursuant to the current law at Clause 3a, Article 5 of the 2008 Value Added Tax Law (amended by Clause 1, Article 3 of the 2014 Law Amending Laws on Taxation), regarding objects not subject to tax as follows:

Objects not subject to tax

...

3a. Fertilizers; specialized machinery and equipment serving agricultural production; offshore fishing vessels; animal feed, poultry feed, and other livestock feed;

...

However, pursuant to Clause 2, Article 9 of the 2024 Value Added Tax Law (effective from July 1, 2025) which regulates a 5% tax rate applicable to the following goods and services:

Tax Rate

...

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

...

e) Products made from jute, sedge, bamboo, rattan, leaves, straw, coconut shell, coconut, water hyacinth, and other handicraft products produced from agricultural waste materials; raw and spun cotton; newsprint;

g) Vessels for fishing in oceanic waters; specialized machinery and equipment serving agricultural production as stipulated by the Government of Vietnam;

h) Medical equipment as stipulated by the law on management of medical equipment; preventive and curative medicines; pharmaceutical materials for manufacturing medicine and vaccines;

...

Thus, from July 1, 2025, offshore fishing vessels (vessels for fishing in oceanic waters) will transition from not being subject to value-added tax under the 2008 Value Added Tax Law (current law) to being subject to a value-added tax rate of 5% according to the 2024 Value Added Tax Law.

From July 1, 2025, do offshore fishing vessels have to pay VAT in Vietnam? (Image from the Internet)

From July 1, 2025, which entities are not subject to VAT in Vietnam?

Based on regulations in Article 5 of the 2024 Value Added Tax Law (effective from July 1, 2025), 26 entities are exempt from VAT as follows:

(1) Products from cultivation, afforestation, poultry farming, aquaculture, and fishing that have not been processed into other products or have been simply processed by the organizations or individuals self-producing, fishing, and selling domestically or at the import stage.

(2) Breeding animal products as per the law on animal husbandry, plant breeding materials as per the law on cultivation.

(3) Livestock feed as per the law on animal husbandry; aquatic feed as per the law on fisheries.

(4) Salt products produced from seawater, natural salt mines, refined salt, and iodized salt with sodium chloride (NaCl) as the main component.

(5) State-owned housing assets sold to current tenants.

(6) Irrigation, drainage; soil plowing; dredging intra-field canals for agricultural production; agricultural harvest services.

(7) Transfer of land use rights.

(8) Life insurance, health insurance, student insurance, other human-related insurance services; livestock insurance, plant insurance, other agricultural insurance services; insurance for fishing vessels, boats, equipment, and other necessary tools directly serving fishing; reinsurance; insurance for oil rigs and equipment, and oil tanker ships registered under foreign nationality when leased by foreign oil contractors or subcontractors operating in Vietnamese waters or overlapping waters under joint exploration policies agreed by Vietnam and neighboring or opposite coastal states.

(9) Financial services, banking, securities trading, commerce, including:

- Loan granting services as per the law on credit institutions and specific fees outlined in Loan Agreements between the Government of Vietnam and foreign lenders;

- Lending services by taxpayers who are not credit institutions;

- Securities trading, including brokerage, self-trading, underwriting, investment consultancy, fund management, portfolio management according to the securities law;

- Capital transfer, including full or partial capital transfer in another economic organization (regardless of establishing a new legal entity), securities transfer, capital contribution rights transfer, and other forms of capital transfer as per the law. This excludes project transfers, asset sales;

- Debt sales including selling accounts payable and receivable;

- Foreign currency trading;

- Derivative products as per the law on credit institutions, securities, and commerce, including interest rate swaps, forward contracts, futures contracts, options, and other derivatives;

- Sale of assets securing debts of organizations 100% state-owned established by the Government of Vietnam to manage and resolve bad debts of Vietnamese credit institutions.

(10) Health and veterinary services, including:

- Health services encompassing medical examination, treatment, disease prevention for humans, family planning services, rehabilitation services; services for the elderly and disabled; patient transportation, accommodation room services, hospital bed rental; laboratory, X-ray, medical imaging services; human-use blood and blood components.

- Elderly and disability care services, including medical care, nutrition, cultural, sports, entertainment activities, physiotherapy, rehabilitation for the elderly and disabled.

In case treatment packages regulated by the Ministry of Health include pharmaceuticals, proceeds from pharmaceuticals in the treatment package are also not subject to VAT;

- Veterinary services, including diagnosis, treatment, disease prevention for animals.

(11) Funeral services.

(12) Maintenance, repair, construction projects funded by public contributions, humanitarian aid (occupying 50% or more of total project funding), including cultural, historical sites, tourist sites, cultural, artistic, public works, infrastructure, and housing for social policy beneficiaries.

(13) Educational activities as per laws on education and vocational training.

(14) Broadcasting activities by national budget funds.

(15) Publishing, importing, distributing newspapers, magazines, bulletins, newsletters, political books, textbooks, teaching materials, legal documents, scientific and technical books, books serving foreign affairs information, books printed in ethnic minority languages, and propaganda posters, both in audio, video, and electronic data forms; currency, minting.

(16) Public passenger transportation by bus, tramway, inland waterway transport.

(17) Machinery, equipment, spare parts, materials not domestically produced required for direct use in scientific research, technology development; special-use spare parts, transport means, materials needed for oil and gas exploration; aircraft, helicopters, gliders, drilling rigs, domestic unmanufactured ships required for fixed assets creation or foreign lease for production, business.

(18) Defense, security products as listed by the Minister of Defense, Minister of Public Security; imported products, services serving national defense, security as listed by the Prime Minister.

(19) Imported goods in humanitarian aid, non-refundable aid, goods sold to foreign organizations, individuals, international organizations for humanitarian aid, non-refundable aid to Vietnam.

(20) Goods in transit through Vietnam; temporary import for re-export; temporary export for re-import; imported raw materials for manufacture, processing of export goods according to foreign-manufactured contractual agreements; goods, services traded between overseas and tax-free zones, and among tax-free zones.

Imported goods from abroad by financial leasing companies transported directly to tax-free zones for financial lease by businesses within such zones.

(21) Technology transfer as per the Law on Technology Transfer; intellectual property transfer as per the Law on Intellectual Property; software products and services according to the law.

(22) Gold bars, ingots not processed into jewelry, fine art, or other products at the import stage.

(23) Exported products are natural resources, unprocessed minerals or processed natural resources, minerals as regulated by the Government suitable with state policies on non-encouragement of raw and unprocessed resources, minerals.

(24) Artificial products meant to substitute for human body parts, including long-term implant products in human bodies; crutches, wheelchairs, and specialized equipment for the disabled.

(25) Goods, services of households, individual businesses with annual revenue up to 200 million VND; assets of non-business organizations or individuals not subject to VAT; national reserve goods sold by the national reserve agency; legal fee-based collections as specified by the fee and charge law.

(26) Goods imported under the following cases:

- Gifts for state agencies, political organizations, socio-political organizations, socio-professional organizations, social organizations, and armed forces within tax-free thresholds according to export-import tax laws;

- Gifts under legal import tax-free thresholds as prescribed by export-import tax laws given by foreign organizations or individuals to Vietnamese individuals; belongings of foreign organizations or individuals under diplomatic immunity and movement assets within import tax-free thresholds as regulated by export-import tax laws;

- Goods in luggage within the tax-free standards as regulated by export-import tax laws;

- Goods donated or sponsored for disaster, pandemic, or war recovery as per Government policy;

- Goods traded, exchanged across bordering areas for production, consumption by border residents within tax-free thresholds according to export-import tax laws;

- Artifacts, cultural treasures, national treasures as defined by heritage laws imported by competent authorities.

When is the new effective time for determining VAT in Vietnam?

As per Article 8 of the 2024 Value Added Tax Law (effective from July 1, 2025), the timing for determining value-added tax is as follows:

- For goods, it is the time of transfer of ownership or use rights to the purchaser or the time of invoice issuance, regardless of payment receipt;

- For services, it is the time of service completion or invoice issuance for services, regardless of payment receipt.

Additionally, the determination time for value-added tax on the following goods and services is stipulated by the Government of Vietnam:

- Exported and imported goods;

- Telecommunication services;

- Insurance business services;

- Electricity supply, water production services;

- Real estate business activities;

- Construction, installation, and petroleum activities.