Is the confectionery business during the 2025 Tet holiday subject to VAT in Vietnam?

Is the confectionery business during the 2025 Tet holiday subject to VAT in Vietnam?

Based on Article 4 of the Law on Value-Added Tax 2008 concerning taxpayers, the regulation is as follows:

Taxpayers

Value-added tax taxpayers are organizations and individuals producing and trading goods and services subject to value-added tax (hereinafter referred to as business establishments) and organizations and individuals importing goods subject to value-added tax (hereinafter referred to as importers).

Referring to Article 3 of the Law on Value-Added Tax 2008 on taxable subjects, the regulation is as follows:

Taxable subjects

Goods and services used for production, business, and consumption in Vietnam are subject to value-added tax, except for cases stipulated in Article 5 of this Law.

Simultaneously, according to Article 5 of the Law on Value-Added Tax 2008 (amended by Clause 1 Article 1 of the Amended Law on Value-Added Tax 2013, supplemented by Clause 1 Article 3 of the Law on Amendments to Tax Laws 2014 and amended by Clause 1 Article 1 of the Law Amending and Supplementing Certain Provisions of the Law on Value-Added Tax, Special Consumption Tax Law, and Tax Administration Law 2016), specifying non-taxable VAT subjects.

According to these regulations, confectionery is not among the items exempt from VAT, so the business of confectionery business remains subject to VAT.

Additionally, if a household business or individual business confectionery business has a revenue of 100 million VND/year or less, they are not required to pay VAT (Clause 2 Article 4 of Circular 40/2021/TT-BTC).

Is the confectionery business during the 2025 Tet holiday subject to VAT in Vietnam? (Image from the Internet)

What is the taxable price for confectionery business in Vietnam?

According to Point a, Clause 1, Article 7 of the Law on Value-Added Tax 2008 amended by Clause 1, Article 1 of the Amended Law on Value-Added Tax 2013, the regulation on taxable prices is as follows:

Taxable price

1. The taxable price is regulated as follows:

a) For goods and services sold by production, business establishments, it is the selling price exclusive of VAT; for goods and services subject to special consumption tax, it is the selling price inclusive of special consumption tax but exclusive of VAT; for goods subject to environmental protection tax, it is the selling price inclusive of environmental protection tax but exclusive of VAT; for goods subject to both special consumption tax and environmental protection tax, it is the selling price inclusive of both taxes but exclusive of VAT;

b) For imported goods, the taxable price is the import price at the border gate plus import duty (if any), plus special consumption tax (if any), and plus environmental protection tax (if any). The import price at the border gate is determined according to regulations on the taxable price of imported goods;

...

Thus, the VAT taxable price for confectionery sold by business establishments is the selling price exclusive of VAT.

Which subjects are not subject to VAT under current regulations?

Pursuant to Article 5 of the Law on Value-Added Tax 2008 (amended by Clause 1 Article 1 of the Amended Law on Value-Added Tax 2013, supplemented by Clause 1 Article 3 of the Law on Amendments to Tax Laws 2014 and amended by Clause 1 Article 1 of the Law Amending and Supplementing Certain Provisions of the Law on Value-Added Tax, Special Consumption Tax Law, and Tax Administration Law 2016), the non-taxable VAT subjects include:

- Products from cultivation, breeding, aquaculture, and fishing unprocessed into other products or only through simple preliminary processing, sold or imported by self-producing, harvesting organizations, individuals.

Enterprises and cooperatives purchasing agricultural, forestry, fishery, and salt products unprocessed into other products or only through simple preliminary processing, selling them to other enterprises and cooperatives are not required to declare and pay VAT but can deduct input VAT.

- Products like breeding animals, seedlings, including eggs, seed animals, young plants, seeds, semen, embryos, genetic materials.

- Irrigation, drainage services; land preparation services; canal, ditch dredging within local production areas; agricultural product harvesting services.

- Fertilizers; machinery and equipment specifically used for agricultural production; offshore fishing vessels; feed for livestock, poultry, and other domestic animals.

- Salt products produced from seawater, natural rock salt, refined salt, iodized salt where the main component is Sodium Chloride (NaCl).

- State-owned housing sold to current tenants.

- Land use rights transfer.

- Life insurance, health insurance, student insurance, other human-related insurance services; insurance for breeding and planting, other agricultural insurance services; insurance for ships, boats, and necessary equipment directly serving fishing; reinsurance.

- Financial, banking, and securities trading services as follows:

+ Credit granting services including lending; discounting, re-discounting of negotiable instruments and other valuable papers; guarantees; financial leasing; issuance of credit cards; domestic factoring; international factoring; other credit granting forms as per legal regulations;

+ Lending services provided by taxpayers who are not credit institutions;

+ Securities trading services including securities brokerage; securities dealing; securities issuance guarantee; securities investment consultancy; securities custody; fund management; portfolio management; market organization activities by stock exchanges or securities trading centers; other securities trading activities as per securities laws;

+ Capital transfer including transfer of partial or entire invested capital, including enterprise sale to another enterprise for production and business needs, securities transfer; other capital transfer forms as per legal regulations;

+ Selling of debt;

+ Foreign exchange trading;

+ Derivative financial services including interest rate swaps; forward contracts; futures contracts; options on buying and selling foreign currencies; other derivative financial services as per legal regulations;

+ The sale of secured assets of debts owned by organizations wholly capitalized by the Government of Vietnam, established to handle bad debts of Vietnam's credit institutions.

- Medical and veterinary services, including examination, treatment, prevention services for people and animals; services for the care of the elderly, and people with disabilities.

- Public postal and telecommunications services and Internet access per the Government of Vietnam's program.

- Maintenance services for zoos, flower gardens, parks, street trees, public street lighting; funeral services.

- Repairing, building, and reconstructing, funded by people's contributions and humanitarian aid-money for cultural, artistic works, public service facilities, infrastructure, and housing for social policy subjects.

- Educational and vocational training services as prescribed by law.

- Broadcasting services funded by the state budget.

- Publishing, importing, distributing newspapers, periodicals, bulletins, specialized journals, political books, textbooks, teacher's books, law books, scientific-technical books, books printed in ethnic minority languages, and propaganda pictures, posters, banners, including in audio, visual, electronic data forms; money and money printing.

- Public passenger transport by bus, tram.

- Machinery, equipment, spare parts, and materials not produced domestically and need to be imported for use directly in scientific research and technology development activities; machines, equipment, replacement parts, special-purpose transportation vehicles and materials not produced domestically and need to be imported to carry out oil and gas exploration, drilling, development activities; aircraft, oil rigs, ships not produced domestically and need to be imported to form fixed assets of enterprises or leased from abroad for production, business, leasing, or subleasing purposes.

- Specialized weapons and equipment for national defense and security.

- Imported humanitarian aid, non-refundable aid goods; gifts for state agencies, political organizations, socio-political organizations, socio-political-professional organizations, social organizations, socio-professional organizations, and armed force units; gifts for individuals in Vietnam according to regulations of the Government of Vietnam; personal effects of foreign organizations, individuals exempted from diplomatic immunity; goods carried with individuals within duty-free luggage allowance.

Goods and services sold to foreign organizations, international organizations for humanitarian aid, and non-refundable aid to Vietnam.

- Goods on transit, transshipment through the territory of Vietnam; temporary imports for re-export; temporary exports for re-import; raw materials imported for export production, and processing of goods as per export production contracts signed with the foreign party; goods and services bought and sold between foreign countries and tax-free zones and among tax-free zones.

- Technology transfer as per provisions of the Technology Transfer Law 2017; transfer of intellectual property rights as per provisions of the Intellectual Property Law 2005; computer software.

- Imported gold in the form of bullion or pieces not processed into art, jewelry, or other products.

- Exported products that are raw resources and minerals not processed into other products; exported products processed from resources and minerals for which the collective value of resources, minerals plus energy costs constitutes at least 51% of the product's cost.

- Artificial body parts used to replace human body parts; crutches, wheelchairs, and other specialized instruments for people with disabilities.

- Goods and services of households and individual businesses with annual turnover from one hundred million VND or less.

Business establishments dealing in goods and services not subject to value-added tax as stipulated in Article 5 of the Law on Value-Added Tax 2008 are not permitted to deduct or refund input value-added tax unless applied with the 0% tax rate as per Clause 1 Article 8 of the Law on Value-Added Tax 2008.