From July 1, 2025, when is the time for determination of value-added tax for services in Vietnam?

From July 1, 2025, when is the time for determination of value-added tax for services in Vietnam?

Pursuant to Article 8 of the Law on Value-Added Tax 2024 (effective July 1, 2025), the determination of value-added tax is stipulated as follows:

Time for determination of VAT

1. The Time for determination of VAT is prescribed as follows:

a) For goods, it is the time of transferring ownership or rights of use to the buyer or the time of issuing the invoice, regardless of whether payment has been received or not;

b) For services, it is the time of completing the provision of services or the time of issuing the service provision invoice, regardless of whether payment has been received or not.

2. The Time for determination of VAT for the following goods and services is prescribed by the Government of Vietnam:

a) Exported and imported goods;

b) Telecommunications services;

c) Insurance business services;

d) Electricity supply activities, electricity production, and clean water activities;

đ) Real estate business activities;

e) Construction and installation activities, and oil and gas activities.

Thus, as soon as the Law on Value-Added Tax 2024 becomes effective from July 1, 2025, the Time for determination of VAT for services is when the service is completed or when the service provision invoice is issued, regardless of whether payment has been received or not.

From July 1, 2025, when is the time for determination of value-added tax for services in Vietnam? (Image from the Internet)

Which types of services does the 5% value-added tax rate apply to in Vietnam?

According to clause 2, Article 8 of the Law on Value-Added Tax 2024 (effective July 1, 2025), the types of goods and services applying the value-added tax rate of 5% are stipulated as follows:

Tax rate

...

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

a) Clean water for production and domestic use, excluding bottled, canned drinking water and other beverages;

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

c) Landfill and dredging services for canals, ditches, ponds, and lakes for agricultural production; cultivation, care, pest control for plants; preliminary processing, preservation of agricultural products;

d) Plant products, planted forests (excluding timber, bamboo shoots), livestock, aquaculture, and fishing not processed into other products or only through basic processing, except products specified in clause 1 of Article 5 of this Law;

đ) Raw rubber latex, rubber sheets, rubber crumbs, rubber lumps; nets, twine, and yarn for weaving fishnets;

e) Products made of jute, rush, bamboo, sedge, palm, straw, coconut fibers, coconut shells, water hyacinth, and other handicraft products made from agricultural waste materials; cotton fibers through carding, refined carding; printing paper;

g) Boats for seafood exploitation in marine areas; specialized machinery and equipment for agricultural production as prescribed by the Government of Vietnam;

h) Medical equipment as prescribed by the law on medical equipment management; drugs for disease prevention and treatment; pharmaceutical substances, and medicinal herbs as raw materials for the production of medicines for disease prevention and treatment;

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

k) Traditional, folk art performance activities;

l) Children's toys; books of all kinds, except books specified in clause 15 of Article 5 of this Law;

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

n) Sale, lease, lease-purchase of social housing as prescribed by the Housing Law.

...

Thus, the types of services applying the value-added tax rate of 5% include:

- Landfill and dredging services for canals, ditches, ponds, and lakes for agricultural production; cultivation, care, pest control for plants; preliminary processing, preservation of agricultural products;

- Science and technology services as prescribed by the Law on Science and Technology.

Where is the place to submit value-added tax in Vietnam?

Pursuant to Article 20 of Circular 219/2013/TT-BTC stipulating the place to submit value-added tax as follows:

Place for submitting tax

1. Taxpayers declare and submit VAT at the localities where they produce or do business.

2. Taxpayers declaring and submitting VAT by the deduction method who have production facilities subordinate to accounting units located in provinces or centrally run cities other than where the head office is located must submit VAT at the locality where there are production facilities and where the head office is located.

3. Enterprises or cooperatives applying the direct method with production facilities in provinces or cities different from where the head office is located or have mobile sales activities outside the province must declare and submit VAT at a percentage of revenue at the locality where there are production facilities and mobile sales places. Enterprises, cooperatives do not have to submit VAT at the head office on revenue generated outside the province that has been declared and submitted.

4. In the case of telecommunication service businesses providing postpaid telecommunications services in a locality different from where the head office is and having branch offices subordinate to it, they shall submit VAT by the deduction method participating together in providing these services, the telecommunications business must declare and submit VAT for postpaid telecommunications services as follows:

- Declare VAT on postpaid telecommunications service revenue of the entire business to the tax authority managing the head office.

- Submit VAT at the locality where the head office is located and where the branch offices are located.

The VAT payable at the locality where branch offices are located is determined at the rate of 2% (for postpaid telecommunications services subject to 10% VAT) on revenue (excluding VAT) at that location.

5. VAT declaration and payment shall be conducted according to the Tax Administration Law and its guiding documents.

Thus, the place to submit value-added tax is prescribed at:

- The locality where production or business is conducted.

- The locality where there are production facilities and the locality where the head office is located if the taxpayer declares VAT by the deduction method and has subordinate production facilities located in provinces or centrally run cities other than where the head office is located.

- The locality where there are production facilities and mobile sales places if an enterprise or cooperative applies the direct method with facilities in provinces or cities different from where the head office is located or has mobile sales activities outside the province.

- The locality where the head office is and at the locality where subordinate branches are located if the telecommunication service business provides postpaid services in a different province or centrally run city from where the head office is, and has subordinate branch offices submitting VAT by the deduction method together providing postpaid telecommunications services.