Vietnam: From July 1, 2025, is the time for determining value-added tax for services the time of receiving payment?

What is the method for calculating value-added tax in Vietnam from July 1, 2025?

Pursuant to Article 10 of the Law on Value-Added Tax 2024 (effective from July 1, 2025), the methods for calculating value-added tax include the tax deduction method and the direct calculation method.

From July 1, 2025, is the time for determining value-added tax for services the time of receiving payment in Vietnam?

Pursuant to Article 8 of the Law on Value-Added Tax 2024 (effective from July 1, 2025), the regulations are as follows:

Time of Determination of Value-Added Tax

1. The time of determination of value-added tax is regulated as follows:

a) For goods, it is the time of transfer of ownership or use rights to the buyer or the time the invoice is issued, regardless of whether the money has been collected;

b) For services, it is the time the service provision is completed or the time the service invoice is issued, regardless of whether the money has been collected.

2. The time of determination of value-added tax for the following goods and services is as regulated by the Government of Vietnam:

a) Exported and imported goods;

b) Telecommunications services;

c) Insurance business services;

d) Activities of providing electricity, electricity production, and clean water;

dd) Real estate business activities;

e) Construction, installation activities, and petroleum activities.

Thus, the time for determining value-added tax for services is the time of issuing the invoice, regardless of whether the money has been collected.

Vietnam: From July 1, 2025, is the time for determining value-added tax for services the time of receiving payment? (Image from the Internet)

What are the value-added tax rates in Vietnam according to the Law on Value-Added Tax 2024?

Pursuant to Article 9 of the Law on Value-Added Tax 2024 (effective from July 1, 2025), the value-added tax rates are prescribed as follows:

- A tax rate of 0% applies to the following goods and services:

+ Exported goods including: goods from Vietnam sold to organizations, individuals abroad and consumed outside Vietnam; goods from domestic Vietnam sold to organizations in non-tariff zones and consumed in non-tariff zones for direct production export activities; goods sold in isolated areas to individuals (foreigners or Vietnamese) who have completed exit procedures; goods sold in duty-free shops;

+ Exported services include: services provided directly to organizations, individuals abroad and consumed outside Vietnam; services provided directly to organizations in non-tariff zones and consumed in non-tariff zones for direct production export activities;

+ Other exported goods and services include: international transportation; rental services of transportation means used outside Vietnam's territory; services of the aviation and maritime industries provided directly or through agents for international transportation;

Construction and installation activities of works abroad or in non-tariff zones; digital information content products provided to overseas parties with dossiers and documents proving consumption outside Vietnam according to the regulations of the Government of Vietnam;

Spare parts, materials, and components for repairing and maintaining means, machinery, and equipment for overseas parties consumed outside Vietnam; subcontracted goods for export according to the law; goods and services exempt from value-added tax when exported, except for cases not applying 0% tax rate specified at this clause subsection;

+ Cases not applicable to the 0% tax rate include: transfer of technology, transfer of intellectual property rights abroad; reinsurance services abroad; credit grant services; capital transfer activities; derivative products; postal and telecommunication services; products for export specified in Section 23 of Article 5 of the Law on Value-Added Tax 2024; tobacco, alcohol, beer imported and then exported; gasoline, oil purchased domestically sold to businesses in non-tariff zones; automobiles sold to organizations, individuals in non-tariff zones.

- A tax rate of 5% applies to the following goods and services:

+ Clean water for production and living, excluding bottled water and other types of beverages;

+ Fertilizers, ores for fertilizer production, plant protection drugs, and growth stimulants for animals as prescribed by law;

+ Services of excavating, dredging canals, ditches, ponds, and lakes for agricultural production; cultivating, protecting, and fighting against pests for crops; preliminary processing, preservation of agricultural products;

+ Crops, planted forests (excluding wood, bamboo), livestock, aquaculture, harvesting of seafood not processed into other products or only through ordinary processing, excluding the products specified in Section 1 of Article 5 of the Law on Value-Added Tax 2024;

+ Crumb rubber, latex sheets, field latex, latex balls; nets, ropes, and fishing twines;

+ Products made from jute, rush, bamboo, rattan, leaves, straw, coconut shells, coconut husks, water hyacinth, and other handicrafts made from materials harvested from agriculture; cotton fibers after being carded, spun; newsprint paper;

+ Fishing vessels on the sea; machinery and specialized equipment for agricultural production according to the regulations of the Government of Vietnam;

+ Medical equipment according to the regulations of the law on the management of medical equipment; preventive and curative medicines; pharmaceutical ingredients, medicinal materials as drug production raw materials for medicine, prevention medicine;

+ Equipment for teaching and learning including models, drawings, boards, chalks, compasses;

+ Traditional performance arts, folk arts activities;

+ Toys for children; books of all kinds, except for books specified in Section 15 of Article 5 of the Law on Value-Added Tax 2024;

+ Scientific, technological services according to the regulations of the Science and Technology Law;

+ Sale, lease, lease-purchase of social housing according to the Housing Law.

- A tax rate of 10% applies to goods and services not specified in Sections 1 and 2 of Article 9 of the Law on Value-Added Tax 2024, including services provided by foreign suppliers without permanent establishments in Vietnam to organizations and individuals in Vietnam through e-commerce channels and digital platforms.

- Businesses dealing in multiple types of goods and services with different value-added tax rates (including those not subject to value-added tax) must declare value-added tax according to each tax rate for each type of goods and services; if the business cannot determine according to each tax rate, it must calculate and pay tax at the highest tax rate of goods and services that the business produces or trades.

- Crops, planted forests, livestock, aquaculture, harvested seafood not processed into other products or only through ordinary processing used for animal feed, medicinal purposes shall apply the value-added tax rate according to the tax rate specified for crops, planted forests, livestock, aquaculture.

By-products, secondary products, and waste products retrieved for recycling or reuse when sold apply the tax rate according to the tax rate of the by-product, secondary product, or waste product sold.

- The Government of Vietnam stipulates details for Sections 1 and 2 of Article 9 of the Law on Value-Added Tax 2024. The Minister of Finance prescribes the dossier and procedures for applying the 0% value-added tax rate at Section 1 of Article 9 of the Law on Value-Added Tax 2024.