Is natural rock salt subject to VAT in Vietnam in 2025?

Is natural rock salt subject to VAT in Vietnam in 2025?

Based on Clause 4, Article 5 of the Law on Value Added Tax 2024, specific regulations on non-taxable subjects are as follows:

Non-taxable Subjects

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3. Animal feed according to the provisions of the law on animal husbandry; aquatic feed according to the provisions of the law on fisheries.

4. Salt products produced from seawater, natural rock salt, refined salt, iodized salt whose main ingredient is Sodium Chloride (NaCl).

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Based on Article 18 of the Law on Value Added Tax 2024, specific regulations on the effective date are as follows:

Effective Date

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

2. The regulations on the revenue level of households and individual producers or business entities subject to non-taxable status in Clause 25, Article 5 of this Law and Article 17 of this Law take effect from January 1, 2026.

3. The Law on Value Added Tax No. 13/2008/QH12, as amended and supplemented by Law No. 31/2013/QH13, Law No. 71/2014/QH13, and Law No. 106/2016/QH13, ceases to be effective from the date this Law takes effect.

Accordingly, according to the above regulations, from July 1, 2025, natural rock salt will not be subject to value added tax.

Is natural rock salt subject to VAT in Vietnam in 2025? (Image from the Internet)

How is the value added tax base calculated in Vietnam from July 1, 2025?

According to Article 7 of the Law on Value Added Tax 2024, specific regulations on the value added tax base are as follows:

[1] The tax base is determined as follows:

- For goods and services sold by a business is the selling price excluding value added tax; for goods and services subject to special consumption tax is the selling price including special consumption tax but excluding value added tax; for goods subject to environmental protection tax is the selling price including environmental protection tax but excluding value added tax; 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 value added tax;

- For imported goods, it is the import tax calculated according to the provisions of import and export tax law plus import tax, plus supplementary import taxes as prescribed by law (if any), plus special consumption tax (if any), and plus environmental protection tax (if any);

- For goods and services used for exchange, internal consumption, gift, or donation, the tax base is the value added tax of similar or equivalent goods and services at the time these activities occur. For goods and services used for promotions according to the provisions of commercial law, the tax base is determined as zero (0);

- For asset leasing activities, it is the lease amount excluding value added tax. In cases of leasing with payment by installment or prepayment for the lease term, the tax base is the rental amount paid in installments or prepaid for the lease term excluding value added tax;

- For goods sold on instalments or deferred payment, the tax base is the one-time payment selling price excluding value added tax of that good, not including installment interest, deferred interest;

- For outsourcing of goods, it is the outsourcing price excluding value added tax;

- For construction and installation activities, it is the value of the construction, items of construction, or the part of the work delivered, excluding value added tax. In cases where construction and installation do not include materials, machinery, and equipment, the tax base is the construction and installation value excluding the value of materials, machinery, and equipment;

- For real estate business activities, it is the selling price of real estate excluding value added tax minus any land levy or land rent paid to the state budget (deducted land value). the Government of Vietnam prescribes the determination of the deducted land value as mentioned in this point in accordance with land laws;

- For agency activities, brokerage in buying and selling goods and services earning commission, it is the commission received from these activities excluding value added tax;

- For goods and services using invoices with payment prices that include value added tax, the tax base is determined according to the following formula:

- For casino, prize electronic games business is the amount collected from these activities minus the amount exchanged back for unspent customers and the prize amount paid to customers (if any), including special consumption tax, excluding value added tax;

- For production and business activities, including: electricity production activities of Vietnam Electricity, transportation, loading; tourism services in the form of travel; pawn services; VAT books sold at the published price (cover price); printing activities; inspection agency services, damage assessment agency services, third-party recovery agency services, agency services for handling fully compensated goods enjoying salary or commission, it is the selling price excluding value added tax. the Government of Vietnam prescribes the tax base for production and business activities specified at this point.

[2] The tax base for goods and services specified in Clause 1, Article 7 of the Law on Value Added Tax 2024 includes any surcharges and additional fees that the business receives.

Which entities are VAT payers in Vietnam from July 1, 2025?

According to Article 4 of the Law on Value Added Tax 2024, specific regulations on VAT payers are as follows:

- Organizations, households, and individuals producing or trading goods and services subject to value added tax (hereinafter referred to as business establishments).

- Organizations and individuals importing goods subject to value added tax (hereinafter referred to as importers).

- Organizations and individuals producing and doing business in Vietnam purchasing services (including cases of purchasing services attached to goods) from foreign organizations without a permanent establishment in Vietnam, individuals abroad who are non-residents in Vietnam, except as provided in Clause 4 and Clause 5, Article 4 of the Law on Value Added Tax 2024; organizations producing or doing business in Vietnam purchasing goods and services to conduct search and exploration activities, development of oil and gas fields, and exploitation of oil and gas from foreign organizations without a permanent establishment in Vietnam, individuals abroad who are non-residents in Vietnam.

- Foreign suppliers without a permanent establishment in Vietnam engaging in e-commerce business, business based on digital platforms with organizations and individuals in Vietnam (hereinafter referred to as foreign suppliers); organizations as foreign digital platform managers deduct and pay tax obligations on behalf of foreign suppliers; business organizations in Vietnam applying the value added tax deduction method purchasing services from foreign suppliers without a permanent establishment in Vietnam through e-commerce channels or digital platforms deducting and paying tax obligations on behalf of foreign suppliers.

- Organizations as e-commerce exchange platform managers, digital platform managers with payment functions, deduct and pay tax, declare withheld taxes for household businesses and business individuals on e-commerce platforms, digital platforms.