What 08 financial, banking, securities trading, and commercial services shall be exempt from VAT in Vietnam from July 1, 2025?

What 08 financial, banking, securities trading, and commercial services shall be exempt from VAT in Vietnam from July 1, 2025?

Pursuant to Clause 9, Article 5 of the Law on Value Added Tax 2024, effective from July 1, 2025, the following 08 financial, banking, securities trading, and commercial services are exempt from VAT:

- Credit granting services as regulated by the law on credit organizations and fees specifically stated in the Loan Agreement of the Government of Vietnam with foreign lenders;

- Lending services of taxpayers not being credit organizations;

- Securities trading including brokerage, proprietary trading, underwriting securities, securities investment consultancy, securities investment fund management, securities portfolio management as stipulated by law on securities;

- Capital transfer including partial or whole transfer of invested capital into other economic organizations (regardless of the formation of a new legal entity), securities transfer, right to contribute capital transfer, and other forms of capital transfer according to the law, including the case of selling businesses to other enterprises for production, business purposes where the buyer inherits all rights and obligations of the selling enterprise under the law. Capital transfer as mentioned does not include the transfer of investment projects or the sale of assets;

- Debt selling including selling receivables and payables;

- Foreign currency trading;

- Derivative products as regulated by law on credit organizations, securities law, and commercial law, including: interest rate swaps; forward contracts; futures contracts; call and put options, and other derivative products;

- Sale of collateral of debts held by organizations wholly owned by the Government of Vietnam, established to handle non-performing loans of Vietnamese credit organizations.

What 08 financial, banking, securities trading, and commercial services shall be exempt from VAT in Vietnam from July 1, 2025? (Image from the Internet)

When is the determination time for VAT in Vietnam from July 1, 2025?

According to Clause 1, Article 8 of the Law on Value Added Tax 2024, the determination time for VAT is prescribed as follows:

VAT Determination Time

1. The time for determining VAT is regulated as follows:

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

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

....

Thus, the determination time for VAT is prescribed as follows:

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

- For services, it is the time of service provision completion or the time of invoice issuance for the service, regardless of whether money has been collected.

The Government of Vietnam prescribes the time for determining VAT for goods and services as follows:

- Exported goods, imported goods;

- Telecommunication services;

- Insurance business services;

- Electricity and water supply activities;

- Real estate business activities;

- Construction, installation, and oil and gas activities.

What are regulations on the VAT deduction method in Vietnam from July 1, 2025?

Pursuant to Article 11 of the Law on Value Added Tax 2024, it is regulated as follows:

- The deduction method is prescribed as follows:

+ The payable VAT by the deduction method equals output VAT minus deductible input VAT;

+ Output VAT equals the total VAT of goods and services sold recorded on the VAT invoice.

The VAT of goods and services sold recorded on the VAT invoice is calculated by multiplying the sale price subject to tax by the applicable VAT rate.

In cases where the invoice shows the payment price as inclusive of VAT, the output VAT is determined by subtracting the sale price from the taxable value determined according to point k, Clause 1, Article 7 of the Law on Value Added Tax 2024.

+ Deductible input VAT equals the total amount recorded on the VAT invoice for purchased goods and services, VAT payment receipts for imported goods, or payment receipts for purchasing services stipulated in Clauses 3 and 4, Article 4 of the Law on Value Added Tax 2024 and meeting the conditions stipulated in Article 14 of the Law on Value Added Tax 2024.

- The deduction method applies to business establishments fulfilling all accounting policies, invoices, and receipts as regulated by accounting law, invoice, and receipt law, including:

+ Business establishments with an annual revenue from goods sales and service provision from 01 billion VND or more, excluding households, individual producers, and businesses;

+ Business establishments voluntarily applying the deduction method, excluding households, individual producers, and businesses;

+ Foreign organizations and individuals supplying goods and services for the exploration, development, and exploitation of oil and gas fields, paying VAT by the deduction method declared, deducted, and paid on their behalf by the Vietnamese party.

Note: The Law on Value Added Tax 2024 takes effect from July 1, 2025, except as provided in Clause 2, Article 18 of the Law on Value Added Tax 2024.