From July 1, 2025, will the VAT rate on children toys increase from 5% to 10% in Vietnam?

From July 1, 2025, will the VAT rate on children toys increase from 5% to 10% in Vietnam?

Based on the provisions in Clause 2, Article 8 of the Law on Value-Added Tax 2008, a VAT rate of 5% is applicable to goods and services as follows:

Tax Rate

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

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l) Medical equipment, medical cotton, sanitary napkins; medicines for disease prevention and treatment; pharmaceutical and medicinal products as raw materials for the production of preventive and curative medicines;

m) Teaching and learning aids, including models, drawings, boards, chalk, rulers, compasses, and specialized equipment for teaching, research, and scientific testing;

n) Cultural, exhibition, sports activities; art performances, film production; importation, distribution, and screening of films;

o) Toys for children; all types of books, except those specified in Clause 15, Article 5 of this Law;

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

o) Toys for children; all types of books, except those specified in Clause 15, Article 5 of this Law;

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Based on the provisions in Clause 2, Article 9 of the Law on Value-Added Tax 2024, the 5% tax rate is applicable to the following goods and services:

Tax Rate

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

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

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

c) Services of digging, dredging canals, ditches, ponds, lakes for agricultural production; cultivation, care, pest control for crops; preliminary processing and preservation of agricultural products;

d) Plant products, planted forests (except for wood, bamboo shoots), livestock, aquaculture and captures that have not been processed into other products or have only gone through ordinary preliminary processing, except for products specified in Clause 1, Article 5 of this Law;

dd) Rubber latex forms; nets, net ropes and fibers for making fishing nets;

e) Products made from jute, rush, bamboo, rattan, straw, coconut shells, coconut fibers, water hyacinth, and other handicraft products made from reclaimed agricultural materials; raw cotton carded thoroughly; newsprint;

g) Ships fishing in sea areas; specialized machinery and equipment used for agricultural production as prescribed by the Government of Vietnam;

h) Medical equipment according to the law on managing medical equipment; medicines for disease prevention and treatment; pharmaceutical, medicinal materials as raw materials for the production of preventive and curative medicines;

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

k) Traditional, folk art performance activities;

l) Toys for children; all types of books, except those specified in Clause 15, 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 Law on Housing.

Thus, from July 1, 2025, the VAT rate for children toys will not increase from 5% to 10%.

From July 1, 2025, will the VAT rate on children toys increase from 5% to 10% in Vietnam? (Image from the Internet)

What is the VAT taxable price for children toys sold by the business establishment in Vietnam?

Based on the provisions at Point a, Clause 1, Article 7 of the Law on Value-Added Tax 2008 (amended by Clause 2, Article 1 of the Amended Law on Value-Added Tax 2013) regarding the VAT taxable price for children toys sold by the business establishment as follows:

Taxable Price

1. The taxable price is stipulated as follows:

a) For goods and services sold by the business establishment, it is the selling price excluding VAT; for goods and services 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 special consumption tax and environmental protection tax but excluding VAT;

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Thus, the VAT taxable price for children toys sold by the business establishment is the selling price excluding VAT.

Note:

+ The taxable price for goods and services subject to special consumption tax is the selling price including special consumption tax but excluding VAT;

+ The taxable price for goods subject to environmental protection tax is the selling price including environmental protection tax but excluding VAT;

+ The taxable price for goods subject to both special consumption tax and environmental protection tax is the selling price including special consumption tax and environmental protection tax but excluding VAT;

How many methods are there for calculating VAT in Vietnam?

Based on the provisions in Article 9 of the Law on Value-Added Tax 2008, the methods for calculating VAT are stipulated as follows:

Method of Tax Calculation

The methods for calculating VAT include the tax credit method and the direct calculation method on the added value.

Thus, there are two methods for calculating VAT, which include:

- The tax credit method;

- The direct calculation method on added value.