Shall the transfer of land use rights be exempt from VAT in Vietnam from July 1, 2025?

Shall the transfer of land use rights be exempt from VAT in Vietnam from July 1, 2025?

Based on Clause 7 Article 5 of the Law on Value Added Tax 2024, there are specific provisions regarding tax-exempt subjects as follows:

Subjects not subject to tax

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6. Watering, drainage; plowing, harrowing land; dredging internal field canals and ditches serving agricultural production; agricultural product harvesting services.

7. Transfer of land use rights.

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

Effective date

1. This Law takes effect from July 1, 2025, except for the cases specified in Clause 2 of this Article.

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Therefore, according to the above regulation, from July 1, 2025, income from the transfer of land use rights is exempt from value-added tax.

Shall the transfer of land use rights be exempt from VAT in Vietnam from July 1, 2025? (Image from the Internet)

Which entities are value-added taxpayers in Vietnam from July 1, 2025?

Based on Article 4 of the Law on Value Added Tax 2024, the specific provisions regarding VAT payers are as follows:

- Organizations, households, and individuals producing and 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 trading in Vietnam who purchase services (including cases of purchasing services associated with goods) of foreign organizations without a permanent establishment in Vietnam, non-resident individuals in Vietnam, except in the cases specified in Clauses 4 and 5, Article 4 of the Law on Value Added Tax 2024; organizations producing and trading in Vietnam who purchase goods and services to conduct exploration, development, and exploitation of oil and gas from foreign organizations without a permanent establishment in Vietnam, non-resident individuals in Vietnam.

- Foreign suppliers without a permanent establishment in Vietnam conducting e-commerce, business on digital platforms with organizations and individuals in Vietnam (hereinafter referred to as foreign suppliers); organizations that manage foreign digital platforms conducting deductions and submitting tax obligations on behalf of foreign suppliers; organizations conducting business in Vietnam applying the method of value-added tax deduction for purchasing services from foreign suppliers without a permanent establishment in Vietnam through e-commerce channels or digital platforms conducting deductions and submitting tax obligations on behalf of foreign suppliers.

- Organizations that are managers of e-commerce trading floors, managers of digital platforms with payment functions conducting deductions, paying tax, and declaring tax amounts deducted on behalf of business households, individuals conducting business on e-commerce floors and digital platforms.

How is the value-added tax base price determined in Vietnam from July 1, 2025?

Based on Article 7 of the Law on Value Added Tax 2024, specific provisions on value-added tax base pricing are as follows:

[1] The tax base price is determined as follows:

- For goods and services sold by business establishments, it is the selling price not inclusive of value-added tax; for goods and services subject to special consumption tax, it is the selling price inclusive of special consumption tax but not inclusive of value-added tax; for goods subject to environmental protection tax, it is the selling price inclusive of environmental protection tax but not inclusive of value-added tax; for goods subject to both special consumption tax and environmental protection tax, it is the selling price inclusive of special consumption tax and environmental protection tax but not inclusive of value-added tax;

- For imported goods, it is the import tax base price as stipulated by export and import tax laws plus import duty plus any applicable additional import duties as specified 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, gifting, or donation, it is determined to be the VAT base price of goods and services of the same or equivalent type at the time these activities occur. For goods and services used for promotions as per commercial law, the tax base price is determined to be zero (0);

- For asset leasing activities, it is the rental amount not inclusive of value-added tax. For leases payable in periodic installments or prepaid for the leasing term, the tax base price is the rental payable per period or prepaid for the leasing term not inclusive of value-added tax;

- For goods sold under deferred payment or installment payment, it is the price calculated according to the one-time payment sale price not inclusive of value-added tax of that good, excluding installment interest or deferred payment interest;

- For processed goods, it is the processing price not inclusive of value-added tax;

- For construction and installation activities, it is the value of the construction, work items, or parts handed over not inclusive of value-added tax. In cases of construction and installation without materials, machinery, and equipment, the tax base price excludes the value of materials and machinery, equipment;

- For real estate business activities, it is the real estate selling price not inclusive of value-added tax minus land levy or land rent paid to the state budget (land price deducted). The Government of Vietnam stipulates the determination of the land price to be deducted as per land law in this point;

- For agency, brokerage activities of selling goods and services receiving a commission, it is the commission amount earned from these activities not inclusive of value-added tax;

- For goods and services using invoices showing the payment price including value-added tax, the tax base price is determined according to the following formula:

- For casino business, electronic games with prizes, betting, it is the amount earned from these activities minus the amount refunded to customers who do not fully use the purchased amount and the prize amount paid to customers (if any), inclusive of special consumption tax, not inclusive of value-added tax;

- For production, business activities including: electricity production activities of the Vietnam Electricity Group; transport, loading and unloading; tourism services in the form of tours; pawn services; books subject to value-added tax sold at the published (cover) price; printing activities; agency services for inspection, claim handling, third party compensation claim, 100% compensation handling agency services receiving wages or commissions, the tax base price is the selling price not inclusive of value-added tax. The Government of Vietnam stipulates the tax base price for production and business activities stipulated in this point.

[2] The tax base price for goods and services as specified in Clause 1, Article 7 of the Law on Value Added Tax 2024 includes all surcharges and additional fees that the business establishment is entitled to.