What are supplements to the the Law on Value Added Tax 2024 of Vietnam?

What are supplements to the the Law on Value Added Tax 2024 of Vietnam?

The Law on Value Added Tax 2024, number 48/2024/QH15, was officially passed by the 15th National Assembly during the 8th session program.

The Law on Value Added Tax 2024, number 48/2024/QH15, amends the Law on Value Added Tax 2008, comprising 4 chapters and 17 articles, effective from July 1, 2025.

Read more about the Law on Value Added Tax 2024, number 48/2024/QH15 ...Download

Below is a summary of new points in the Law on Value Added Tax 2024:

(1) Subjects not subject to VAT

- Certain subjects currently exempt from VAT have been omitted, including:

+ Fertilizers; specialized machinery, equipment for agricultural production; offshore fishing vessels;

+ Securities depository; market organization services of stock exchanges or securities trading centers; other securities trading activities...

- Added imported goods for humanitarian aid, disaster, disease, and war prevention support under regulations of the Government of Vietnam as non-taxable subjects.

(2) 0% Tax Rate:

Added certain subjects to the 0% tax rate as follows:

- International transport;

- Construction and installation projects abroad, in non-tariff zones;

- Goods sold in isolated areas to individuals (foreigners or Vietnamese nationals) who have completed exit procedures; goods sold at duty-free shops;

- Export services, including rental service of transport vehicles used outside Vietnam's territory; aviation and maritime services directly supplying or through agencies to international transport.

(3) 5% Tax Rate:

Added certain subjects to the 5% tax rate as follows:

- Fertilizers;

- Fishing vessels operating in marine areas.

(4) 10% Tax Rate

Added certain subjects to the 10% tax rate as follows:

- Unprocessed forest products;

- Sugar; by-products in sugar production, including molasses, bagasse, mud ash;

- Types of equipment, tools specialized for teaching, research, scientific experiments;

- Cultural activities, exhibitions, sports, artistic performances; film production; import, distribution, and screening of films.

(5) Changes in Conditions for Input VAT Deduction

Added certain documents eligible for input VAT deduction:

According to Clause 2, Article 14 of the Law on Value Added Tax 2024, export goods and services must have a contract with a foreign party for the sale, processing of goods, service provision; sale, service provision invoices; non-cash payment documents; customs declaration for exported goods; packing list, invoice, insurance documents (if any). The Government of Vietnam regulates conditions for deduction in cases of exporting goods through overseas e-commerce platforms and certain other specific cases.

(6) Increase the non-taxable revenue threshold to 200 million VND/year. Goods and services of households and individual businesses with annual revenues of 200 million VND or less are not subject to VAT.

This law takes effect from July 1, 2025, except for provisions on the revenue threshold for households and individual businesses not subject to tax, which takes effect from January 1, 2026.

(6) Additional Tax Refund Cases

According to Article 15 of the Law on Value Added Tax 2024, an additional tax refund case is specified as follows:

A business establishment that in a month or quarter has exported goods or services and if the input VAT amount has not yet been fully deducted from 300 million VND or more, shall be entitled to a VAT refund monthly or quarterly, except for goods imported and then exported to another country;

Which entities are subject to value-added tax in Vietnam?

Based on Article 4 of the Law on Value Added Tax 2024, the VAT taxpayers are specified as follows:

(1) Organizations, households, and individuals producing and trading goods and services subject to VAT (hereinafter referred to as business establishments).

(2) Organizations and individuals importing goods subject to VAT (hereinafter referred to as importers).

(3) Organizations and individuals producing, doing business in Vietnam buying services (including buying services associated with goods) from foreign organizations without a permanent establishment in Vietnam, individuals abroad who are non-residents of Vietnam, except as specified in Clauses 4 and 5 of this Article; organizations producing, doing business in Vietnam buying goods, services to carry out oil and gas exploration, development and exploitation activities from foreign organizations without a permanent establishment in Vietnam, individuals abroad who are non-residents of Vietnam.

(4) Foreign suppliers without a permanent establishment in Vietnam that engage in e-commerce, business on digital platforms with organizations and individuals in Vietnam (hereinafter referred to as foreign suppliers); organizations that are foreign digital platform managers that withhold and pay tax obligations on behalf of foreign suppliers; business organizations in Vietnam applying the method of calculating VAT as the deduction method when purchasing services from foreign suppliers without a permanent establishment in Vietnam through e-commerce channels or digital platforms to withhold and pay tax obligations on behalf of foreign suppliers.

(5) Organizations acting as managers of e-commerce trading floors, digital platform managers with payment functions executing tax withholding, replacing payment, declaring the tax withheld for business households, and individual businesses on e-commerce platforms, digital platforms.

The Government of Vietnam provides detailed regulations on (1), (4) and (5); regulations on the taxpayer in case the foreign provider supplies services to a buyer which is a business organization in Vietnam applying the deduction method specified in (4).

When is the time to determine value-added tax in Vietnam?

Based on Article 8 of the Law on Value Added Tax 2024, the time for determining VAT is specified as follows:

(1) The time for determining VAT is stipulated as follows:

- For goods, it is the time of transfer of ownership or the right to use goods to the buyer or the time of invoice issuance, regardless of whether money has been collected or not;

- For services, it is the time of completion of service provision or the time of invoice issuance for service provision, regardless of whether money has been collected or not.

(2) The time for determining VAT for the following goods and services shall be provided by the Government of Vietnam:

- Exported goods, imported goods;

- Telecommunications services;

- Insurance business services;

- Electricity supply activities, electricity production, clean water;

- Real estate business activities;

- Construction, installation, and oil and gas activities.