Vietnam: What types of goods and services does the 0% tax rate apply to from July 1, 2025?

Vietnam: What types of goods and services does the 0% tax rate apply to from July 1, 2025?

Pursuant to Clause 1, Article 9 of the Law on Value Added Tax 2024, a 0% tax rate applies specifically to the following goods and services:

- Export goods, including: goods from Vietnam sold to organizations or individuals abroad and consumed outside Vietnam; goods sold from within Vietnam to organizations in tariff-free zones and consumed in such zones directly serving export production activities; goods sold at isolated areas for individuals ( foreign or Vietnamese ) who have completed exit procedures; goods sold at duty-free shops;

- Export services, including: services provided directly to organizations or individuals abroad and consumed outside Vietnam; services provided directly to organizations in tariff-free zones and consumed in such zones directly serving export production activities;

- Other export goods and services, including: international transportation; rental services for means of transport used outside the territory of Vietnam; aviation and maritime services provided directly or through agents for international transportation; construction and installation activities abroad or in tariff-free zones; digital content products provided to foreign entities with documentation proving consumption outside Vietnam as per the regulations of the Government of Vietnam; spare parts, materials for the repair and maintenance of vehicles, machinery, equipment for foreign entities and consumed outside Vietnam; outsourced goods for export as per regulations; goods and services not subject to value added tax when exported, except for cases not applying the 0% rate as prescribed at point d of this clause;

Note:

The cases where the 0% tax rate is not applied include: technology transfer, transfer of intellectual property rights abroad; reinsurance services abroad; credit granting services; capital transfer; derivative products; postal and telecommunications services; export products as prescribed in Clause 23, Article 5 of this Law; tobacco, alcohol, beer imported and then exported; gasoline, oil purchased domestically and sold to business establishments in tariff-free zones; automobiles sold to organizations, individuals in tariff-free zones.

Vietnam: What types of goods and services does the 0% tax rate apply to from July 1, 2025? (Image from the Internet)

When does the Law on Value Added Tax 2024 come into force in Vietnam?

According to Article 18 of the Law on Value Added Tax 2024, the effective implementation is specified as follows:

Effective Date

1. This Law comes into force from July 1, 2025, except as provided for in Clause 2 of this Article.

2. Provisions on the revenue level of households, individuals engaged in production and business activities not subject to tax as per Clause 25, Article 5, and Article 17 of this Law come into force from January 1, 2026.

3. The Law on Value Added Tax No. 13/2008/QH12 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 comes into force.

Thus, according to the above provision, the Law on Value Added Tax 2024 comes into force from July 1, 2025.

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

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

[1] The tax price is stipulated as follows:

- For goods and services sold by business establishments, it is the sale price excluding value added tax; for goods and services subject to special consumption tax, it is the sale price including special consumption tax but excluding value added tax; for goods subject to environmental protection tax, it is the sale price including environmental protection tax but excluding value added tax; for goods subject to both special consumption tax and environmental protection tax, it is the sale price including both taxes but excluding value added tax;

- For imported goods, it is the taxable import price as regulated by the laws on export tax, import tax plus import tax plus any supplementary import duties according to the 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, donation, it is the value added tax price of goods and services of the same or equivalent type at the time these activities occur. For promotional goods and services as per the law on commerce, the taxable price is zero (0);

- For asset leasing activities, it is the rental amount excluding value added tax. If leasing is on a per-term rental payment or advance payment for the lease term, the taxable price is the rental payment for each term or advance payment excluding value added tax;

- For goods sold on installment or deferred payment basis, it is the one-time payment price excluding value added tax for that good, excluding installment interest or deferred payment interest;

- For processed goods, it is the processing price excluding value added tax;

- For construction and installation activities, it is the value of the works, work items, or the part of work transferred, excluding value added tax. If construction and installation do not include materials, machinery, equipment, the taxable price is the construction and installation value excluding material and machine, equipment value;

- For real estate business activities, it is the sale price of real estate excluding value added tax, minus the land levy or land rent paid to the State budget (the land price deducted). The Government of Vietnam prescribes the determination of the deducted land price stipulated in this point in accordance with the law on land;

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

- For goods and services using invoices indicating prices inclusive of value added tax, the taxable price is determined by the following formula:

- For casino business services, prize-winning electronic games, betting, it is the amount earned from these activities minus the amount returned for unused customers and prize money paid to customers (if any), including special consumption tax, excluding value added tax;

- For production, business activities including electricity production activities of Vietnam Electricity Group; transportation, loading, unloading; tourism services in the form of travel; pawn services; books subject to value added tax sold at the published price (cover price); printing activities; agency services of appraisal, compensation examination, third-party compensation claims, dealing with compensation goods with 100% money or commission, the taxable price is the selling price excluding value added tax. The Government of Vietnam stipulates the taxable price for production and business activities specified in this point.

[2] The taxable value for goods and services specified in Clause 1, Article 7 of the Law on Value Added Tax 2024 includes additional charges and fees that the business establishment is entitled to.