Shall the sea salt be exempt from value-added tax in Vietnam from July 1, 2025?

Shall the sea salt be exempt from value-added tax in Vietnam from July 1, 2025?

Based on Clause 4, Article 5 of the Law on Value-Added Tax 2024 (new law effective from July 1, 2025), it is stipulated as follows:

Non-taxable objects

1. Products from plants, planted forests, livestock, aquaculture, and fishing that have not been processed into other products or have only undergone simple preliminary processing by organizations or individuals who produce, catch, or sell them, and at the import stage.

2. Breeding animals in accordance with animal husbandry laws, and plant breeding materials in accordance with cultivation laws.

3. Animal feed in accordance with animal husbandry laws; aquaculture feed in accordance with fishery laws.

4. Salt products manufactured from seawater, natural mineral salt, refined salt, iodized salt whose main component is Sodium Chloride (NaCl).

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It can be seen that salt products manufactured from seawater with the main component being Sodium Chloride (NaCl) are still non-taxable objects as stipulated in the Law on Value-Added Tax 2024.

Currently, Clause 4, 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 effective from January 1, 2014 (Document expires: July 1, 2025) also stipulates that "Salt products manufactured from seawater, natural mineral salt, refined salt, iodized salt whose main component is Sodium Chloride (NaCl)." are among the non-taxable objects for value-added tax.

Therefore, from July 1, 2025, when the Law on Value-Added Tax 2024 (new law) officially takes effect, salt products manufactured from seawater with the main component being Sodium Chloride (NaCl) will still not be subject to value-added tax as stipulated.

Shall the sea salt be exempt from value-added tax in Vietnam from July 1, 2025? (Image from the Internet)

How to determine value-added tax in Vietnam from July 1, 2025?

Based on Clause 4, Article 8 of the Law on Value-Added Tax 2024 (new law effective from July 1, 2025), it is stipulated as follows:

- The time of determining the value-added tax is regulated as follows:

+ For goods, it is the time of transfer of ownership or the right to use goods to the buyer or the time of issuing the invoice, regardless of whether the payment has been received or not;

+ For services, it is the time of completing the provision of services or the time of issuing the invoice for providing services, regardless of whether the payment has been received or not.

- The time of determining value-added tax for goods and services below is regulated by the Government of Vietnam:

+ Exported goods, imported goods;

+ Telecommunication services;

+ Insurance business services;

+ Electricity supply, production activities, clean water;

+ Real estate business activities;

+ Construction, installation activities, and oil and gas activities.

What are cases of value-added tax refund in Vietnam?

Based on Article 13 of the Law on Value-Added Tax 2008 amended by Clause 7, Article 1 of the Amended Law on Value-Added Tax 2013, further amended by Clause 3, Article 1 of the Amended Law on Value-Added Tax, Special Consumption Tax Law, and Tax Administration Law 2016, the cases eligible for VAT refund are as follows:

- Business establishments paying value-added tax by the credit method, if the input value-added tax is not fully deductible in the month or quarter, it shall be carried forward to the next period.

If a business establishment registered to pay value-added tax by the credit method has a new investment project that is in the investment stage with input value-added tax of goods and services purchased for investment not yet deductible, and has a remaining tax amount of three hundred million VND or more, they shall be refunded value-added tax.

The business establishment is not eligible for a VAT refund but shall carry forward the undeducted tax amount of the investment project to the next period, in accordance with the investment law in the following cases:

+ The investment project of the business establishment does not contribute sufficient charter capital as registered; operates in conditional business sectors without meeting the business conditions as prescribed by the Investment Law or fails to maintain sufficient business conditions during operations;

+ Investment projects in resource and mineral exploitation licensed from July 1, 2016, or investment projects for manufacturing goods products where the total value of resources, minerals plus energy costs account for 51% or more of the product cost as per the investment project.

- Business establishments in a month or quarter with exported goods and services, if the undeducted input value-added tax is three hundred million VND or more, shall be entitled to a VAT refund monthly or quarterly, except for imports for export or exports not performed at the customs operation area as prescribed by the Customs Law 2014.

Tax is refunded first, checked later for taxpayers manufacturing export goods not in violation of tax or customs laws for two consecutive years; taxpayers not in the high-risk category under the Tax Administration Law 2019.

- Business establishments subject to value-added tax by the credit method are granted a VAT refund in cases of ownership transfer, enterprise transformation, merger, consolidation, division, separation, dissolution, bankruptcy, cessation of activities with excess tax payment or undeducted input VAT.

- Foreigners, overseas Vietnamese holding passports or clearance documents issued by competent foreign authorities shall be refunded VAT for goods purchased in Vietnam taken with them upon exit.

- VAT refund for programs and projects using official development assistance (ODA) non-refundable capital, or non-refundable aid, humanitarian aid are regulated as follows:

+ The program or project owner or the main contractor, organizations designated by foreign donors for management of programs, projects using ODA non-refundable capital shall be refunded VAT paid on goods and services purchased in Vietnam for the program or project;

+ Organizations in Vietnam using non-refundable aid, humanitarian aid from foreign organizations or individuals to purchase goods and services for non-refundable aid projects, humanitarian aid projects in Vietnam shall be refunded VAT paid on those goods and services.

- Persons entitled to diplomatic immunity under diplomatic immunity laws buying goods and services in Vietnam for use shall be refunded VAT paid as stated on VAT invoices or payment documents with payment including VAT.

- Business establishments having a VAT refund decision by competent authorities according to law or in cases of VAT refund under an international treaty to which the Socialist Republic of Vietnam is a party.

What are the 08 prohibited acts in tax deduction and VAT refund in Vietnam from July 1, 2025?

According to Article 13 of the Law on Value-Added Tax 2024 (new law effective from July 1, 2025), eight acts prohibited in tax deductions and VAT refund from July 1, 2025, are regulated as follows:

[1] Buying, giving, selling, organizing advertising, brokering for buying, selling invoices.

[2] Creating fictitious transactions for goods purchase, sale, or service provisions, or transactions that are unlawful.

[3] Issuing invoices for goods sold or services provided during temporary business suspension, except for issuing invoices to customers to fulfill contracts signed before the business suspension notice.

[4] Using illegal invoices and documents, illegally using invoices and documents as regulated by the Government of Vietnam.

[5] Failing to transmit electronic invoice data to the tax authorities as prescribed.

[6] Altering, misusing, unauthorized access, or destroying systems of information concerning invoices and documents.

[7] Offering, accepting, mediating bribes or engaging in other acts involving invoices and documents for tax deduction, VAT refund, tax evasion, and tax fraud.

[8] Colluding, covering or networking between tax management officials, tax agencies and business establishments, importers, or among business establishments, importers in using illegal invoices and documents or illegally using invoices and documents for tax deduction, VAT refund, tax evasion, and tax fraud.