What are regulations on revenues not subject to VAT in Vietnam under the latest Law?

What are regulations on revenues not subject to VAT in Vietnam under the latest Law?

On November 26, 2024, the National Assembly passed the Law on Value-Added Tax 2024, effective from July 1, 2025, replacing the Law on Value-Added Tax 2008.

Article 5 of the Law on Value-Added Tax 2024 specifies the goods and services not subject to VAT, including provisions for individual households as follows:

Goods and services not subject to VAT

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25. Goods and services produced and traded by households and individuals with an annual revenue of 200 million VND or less; assets of non-business organizations and individuals, not subject to VAT; national reserve goods sold by the national reserve agency; fees and charges as stipulated by the law on fees and charges.

Additionally, Article 18 of the Law on Value-Added Tax 2024 specifies the effective date as follows:

Effective Date

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

2. The provisions regarding the revenue levels of households and individuals engaged in production and business activities falling under the non-taxable objects in Clause 25, Article 5 of this Law, and Article 17 of this Law, take effect from January 1, 2026.

3. The Law on Value-Added Tax No. 13/2008/QH12, as amended 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 takes effect.

Thus, from January 1, 2026, individual households and businesses with revenue exceeding 200 million VND/year will be subject to VAT, while those below 200 million VND/year will not.

What are regulations on revenues not subject to VAT in Vietnam under the latest Law? (Image from the Internet)

What are goods and services not subject to VAT in Vietnam from July 1, 2025?

According to Article 5 of the Law on Value-Added Tax 2024, 26 goods and services are not subject to VAT as follows:

(1) Products of cultivated plants, planted forests, livestock, aquaculture, and caught seafood that have not been processed into other products or only undergone ordinary preliminary processing by organizations and individuals when selling and importing.

(2) Breeding products according to legal regulations on livestock, and plant breeding materials under legal provisions on cultivation.

(3) Feed for livestock as per legal regulations on livestock; aquatic feed as regulated by laws on fisheries.

(4) Salt products made from seawater, natural mined salt, refined salt, and iodized salt predominantly composed of sodium chloride (NaCl).

(5) State-owned public property housing sold to current tenants.

(6) Water irrigation services; plowing services; inter-field canal dredging for agricultural production; crop harvesting services.

(7) Land use right transfers.

(8) Life insurance, health insurance, student insurance, and other human-related insurance services;

Insurance for livestock, plant insurance, and other agricultural insurance services;

Insurance for ships, boats, equipment, and other essential tools directly used in seafood catching; reinsurance;

Insurance for oil and gas works, equipment, and foreign-flag tankers hired by international oil contractors or sub-contractors operating in Vietnam's sea areas and overlapping waters under joint development agreements with bordering or opposite coastal countries.

(9) Following financial, banking, securities, and commercial services:

- Credit services under legal regulations on credit institutions and fees specified in loan agreements of the Government of Vietnam with foreign lenders;

- Lending services by non-credit institutions by taxpayers;

- Securities trading includes brokerage, securities self-trading, securities issuance underwriting, securities investment consulting, fund management, securities portfolio management as per legal provisions on securities;

- Capital transfers, including transferring part or all of the invested capital in other economic organizations (whether a new legal entity is formed or not), securities transfer, capital contribution rights transfer, and other forms of capital transfer under laws, including cases where businesses are sold to other businesses for production and business purposes and the buyer inherits all rights and obligations of the seller per laws. Capital transfers under this point do not include investment project transfers, asset sales;

- Debt trading includes selling payables and receivables;

- Foreign currency trading;

- Derivatives products under laws relating to credit institutions, securities, and commerce laws, including interest rate swaps; forward contracts; futures contracts; options contracts and other derivatives;

- Sale of secured assets of enterprise debts, which are 100% state-owned enterprises established by the Government of Vietnam with the function of buying and selling debts to handle the bad debts of Vietnam's credit institutions.

(10) The following medical and veterinary services:

- Medical services include: examination, treatment, prevention for humans, reproductive health services, nursing, rehabilitation for patients; care services for the elderly, disabled; patient transportation, room rental, and bed rental services in medical facilities; testing, imaging; blood and blood products for patients.

Care services for the elderly and the disabled include medical, nutritional care and organizing cultural, sports, entertainment activities, physical therapy, and rehabilitation for the elderly and disabled.

In case a medical treatment package under the Ministry of Health's regulations includes medications, revenue from those medications in the treatment package also falls under non-VAT objects;

- Veterinary services include: examination, treatment, prevention for livestock.

(11) Funeral services.

(12) Maintenance, repair, construction activities with people's contributions, humanitarian aid (comprising at least 50% of the total project budget) for historical-cultural relics, scenic spots, cultural-artistic works, public works, infrastructure, and housing for policy beneficiaries.

(13) Educational, vocational training activities according to laws on education and vocational training.

(14) Broadcasting of radio and television funded by the state budget.

(15) Publication, importation, distribution of newspapers, magazines, newsletters, special issues, political books, textbooks, teaching materials, law books, scientific-technical books, books for foreign information service, books printed in ethnic minority languages, and propaganda pictures, posters, even in audio or visual tapes or discs or electronic data; currency, minting money.

(16) Public passenger transport by bus, tram, inland waterway.

(17) Machinery, equipment, spare parts, materials not produced domestically that are needed for import to be used directly for scientific research, technological development; machinery, equipment, replacement parts, specialized vehicles, and materials not produced domestically required for import to conduct exploration, development of oil and gas fields; airplanes, helicopters, gliders, drilling platforms, vessels not produced domestically required for import to create fixed assets of enterprises or to lease from abroad for production, business, or lease.

(18) National defense and security products under the list issued by the Minister of National Defense, the Minister of Public Security; imported products, services serving the national defense-security industry as listed by the Prime Minister of the Government of Vietnam.

(19) Imported goods in cases of humanitarian aid, non-refundable aid. Goods and services sold to foreign organizations and individuals, international organizations for humanitarian aid, non-refundable aid to Vietnam.

(20) Goods in transit through Vietnam's territory; goods temporarily imported for re-export; goods temporarily exported for re-import; imported raw materials for producing, processing goods for export under production and processing export contracts signed with foreign parties; goods and services transacted between foreign countries and tax-free zones and between tax-free zones themselves.

Imported goods from abroad by leasing finance companies directly shipped to tax-free zones for leasing to enterprises in tax-free zones.

(21) Technology transfer under the Law on Technology Transfer; intellectual property rights transfer pursuant to the Law on Intellectual Property; software products and software services under legal regulations.

(22) Gold in bars or pieces not yet crafted into fine art, jewelry, or other products upon importation.

(23) Exported products that are unprocessed resources, minerals, and exported products that have been processed into other products as per the List regulated by the Government of Vietnam in line with the State's orientation not to encourage or restrict exports of raw resources and minerals.

(24) Artificial products used to replace human body parts, including products long-term implanted in the human body; crutches, wheelchairs, and other specialized tools for the disabled.

(25) Goods and services produced and traded by households and individuals with an annual revenue from 200 million VND or less; assets of non-business organizations and individuals, not subject to VAT; national reserve goods sold by the national reserve agency; fees and charges as stipulated by the law on fees and charges.

(26) Imported goods under the following circumstances:

- Gifts to state agencies, political organizations, socio-political organizations, socio-political-professional organizations, social organizations, professional-social organizations, people's armed forces within the tax-free import limits as regulated by law on export and import taxes;

- Gifts within tax-free import limits as regulated by law on export and import taxes from foreign organizations and individuals to Vietnamese individuals; items of foreign organizations and individuals under diplomatic and consular privileges and immunities and movable property within tax-free import limits as regulated by law on export and import taxes;

- Goods in luggage exempt from import duty as prescribed by law on export and import taxes;

- Goods imported in support of, sponsorship for disaster, natural disaster, disease, war aftermath prevention, response, overcoming according to the Government of Vietnam's regulations;

- Goods sold, exchanged across the border to serve production and consumption of border residents according to the Border Goods Exchange List as stipulated by law and within tax-free import limits as specified in the law on export and import taxes;

- Antiques, artifacts, national treasures according to the laws on cultural heritage imported by competent state agencies.

The Law on Value-Added Tax 2024 takes effect from July 1, 2025, except for regulations regarding the revenue level of production and business individuals exempt from tax, which take effect from January 1, 2026.

Which goods are subject to a 0% tax rate in Vietnam under the Law on Value-Added Tax 2024?

According to Clause 1, Article 9 of the Law on Value-Added Tax 2024, the 0% tax rate applies as follows:

- Exported goods include: goods from Vietnam sold to foreign organizations and individuals and consumed outside Vietnam; goods from Vietnam's domestic market sold to organizations in tax-free zones and consumed in those zones directly serving production for export; goods sold in quarantine areas to individuals (foreign or Vietnamese) who have completed exit procedures; goods sold in duty-free shops;

- Export services include: services provided directly to foreign organizations and individuals and consumed outside Vietnam; services provided directly to organizations in tax-free zones and consumed in those zones, directly serving export production;

- Other exported goods and services include: international transportation; leasing of means of transportation used outside the Vietnamese territory; aviation and maritime services provided directly or through agents for international transport; construction, installation activities for projects abroad or in tax-free zones; digital information content products provided to foreign parties with dossiers and documentation proving consumption outside Vietnam as per the regulations of the Government of Vietnam; spare parts, materials for repairing, maintaining means, machinery, and equipment for foreign parties and consumed outside Vietnam; intermediary processed goods for export under laws; goods and services not subject to VAT when exported, excluding cases where the 0% tax rate does not apply as stipulated in subsection d of this point;

- Cases where the 0% tax rate does not apply include: technology transfer, intellectual property rights transfer abroad; reinsurance services abroad; credit provision services; capital transfers; derivative products; postal, telecommunications services; export products specified in Clause 23, Article 5 of the Law on Value-Added Tax 2024; imported tobacco, alcohol, beer then exported; gasoline, oil purchased domestically sold to businesses in tax-free zones; cars sold to organizations and individuals in tax-free zones.