What are the 02 regulations of the Law on Value Added Tax 2024 that will come into force in Vietnam on January 1, 2026?

What are the 02 regulations of the Law on Value Added Tax 2024 that will come into force in Vietnam on January 1, 2026?

Based on Article 18 of the Law on Value Added Tax 2024 regarding its effective implementation, as follows:

Effective Implementation

1. This Law takes effect from July 1, 2025, except as stipulated in Clause 2 of this Article.

2. The regulations regarding the revenue thresholds for households and individuals engaged in production and business activities that fall under the category not subject to tax as per Clause 25, Article 5 of this Law and Article 17 of this Law shall come into force from January 1, 2026.

3. The Law on Value Added Tax No. 13/2008/QH12, which has been amended and supplemented by Law No. 31/2013/QH13, Law No. 71/2014/QH13, and Law No. 106/2016/QH13, shall cease to be effective from the effective date of this Law.

This Law was passed by the National Assembly of the Socialist Republic of Vietnam, Session XV, at its 8th Meeting on November 26, 2024.

Based on Clause 25, Article 5 of the Law on Value Added Tax 2024, which states:

Subjects Not Subject to Tax

...

25. Goods and services provided by households and individuals with annual revenue of up to 200 million VND; assets of non-business organizations and individuals that are not VAT taxpayers when sold; national reserves sold by the national reserve authority; fees and charges collected as prescribed by the law on fees and charges.

26. Imported goods under the following circumstances:

a) Gifts to state agencies, political organizations, socio-political organizations, socio-political-professional organizations, social organizations, socio-professional organizations, or people's armed forces units within the import tax exemption limit as prescribed by law on export and import taxes;

b) Gifts within the import tax exemption limit as prescribed by law on export and import taxes from foreign organizations or individuals to Vietnamese individuals; goods of foreign organizations or individuals under diplomatic immunity standards and moving assets within the import tax exemption limit as prescribed by law on export and import taxes;

c) Goods within the duty-free luggage allowance as prescribed by law on export and import taxes;

...

And based on Article 17 of the Law on Value Added Tax 2024, which states:

Amendments and Supplements to Clause 1, Article 3 of the Personal Income Tax Law No. 04/2007/QH12, amended and supplemented by Law No. 26/2012/QH13 and Law No. 71/2014/QH13

“1. Income from business activities, including:

a) Income from the production and business of goods and services;

b) Income from independent professional activities of individuals holding licenses or practicing certificates as prescribed by law.

Income from business activities specified in this clause does not include the income of households and individuals whose revenue is below the threshold specified in Clause 25, Article 5 of the Law on Value Added Tax.”

Thus, the two regulations of the Law on Value Added Tax 2024 that will come into force from January 1, 2026, are:

- Regulation on the revenue threshold of households and individuals engaged in production and business activities that fall under the non-taxable category as per Clause 25, Article 5 of the Law on Value Added Tax 2024.

- Regulation on income from business activities in Article 17 of the Law on Value Added Tax 2024.

What are the 02 regulations of the Law on Value Added Tax 2024 that will come into force in Vietnam on January 1, 2026? (Image from the Internet)

What are regulations on taxpayers in Vietnam according to the Law on Value Added Tax 2024?

Based on Article 4 of the Law on Value Added Tax 2024 (effective from January 1, 2025), it is stipulated about taxpayers as follows:

- Organizations, households, and individuals engaged in the production, business of taxable goods and services (hereinafter referred to as business establishments).

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

- Organizations and individuals in Vietnam purchasing services (including cases of purchasing services linked with goods) from foreign organizations without a permanent establishment in Vietnam, or individuals abroad who are non-residents in Vietnam, except as stipulated in Clauses 4 and 5, Article 4 of the Law on Value Added Tax 2024; organizations engaged in production and business in Vietnam purchasing goods and services for executing activities related to oil and gas exploration, field development, and extraction from foreign organizations not having a permanent establishment in Vietnam, or individuals abroad who are non-residents in Vietnam.

- Foreign suppliers without a permanent establishment in Vietnam conducting e-commerce business, business activities based on digital platforms with organizations and individuals in Vietnam (hereinafter referred to as foreign suppliers); organizations as foreign digital platform managers responsible for withholding and replacing the tax obligations to be paid by foreign suppliers; business organizations in Vietnam implementing VAT calculation methods as the deduction method purchase services from foreign suppliers without a permanent establishment in Vietnam through e-commerce channels or digital platforms that perform withholdings and fulfill the tax obligations on behalf of foreign suppliers.

- Organizations as managers of e-commerce platforms, digital platform managers with payment functions perform tax deductions, pay taxes, declare the withheld tax amounts for business household individuals, and business individuals on e-commerce platforms and digital platforms.

- the Government of Vietnam provides detailed regulations concerning Clauses 1, 4, and 5, Article 4 of the Law on Value Added Tax 2024; stipulations about taxpayers in cases where foreign suppliers provide services to purchasers being business organizations in Vietnam applying the deduction method as stipulated in Clause 4, Article 4 of the Law on Value Added Tax 2024.

What is the time for determining VAT in Vietnam according to the Law on Value Added Tax 2024?

Based on Clause 1, Article 8 of the Law on Value Added Tax 2024 (effective from January 1, 2025), the point of VAT determination according to the Law on Value Added Tax 2024 is stipulated as follows:

- For goods, it is the time of transfer of ownership or use rights for goods to the buyer or the time of invoicing, regardless of whether payment has been received.

- For services, it is the time of completion of service provision or the time of service invoicing, regardless of whether payment has been received.