What are the applicable VAT rates in Vietnam from July 1, 2024?

What are the applicable VAT rates in Vietnam from July 1, 2024?

Under Article 8 of the Law on VAT 2008 (amended by Clause 3 Article 1 of the Law on Amendment to Law on VAT 2013, Article 1 of the Law on Amendment Law on VAT, Special Consumption Tax, and Tax Administration 2016, Article 3 of the Law on Amendment to Law on Taxes 2014) and Decree 72/2024/ND-CP stipulating the VAT rates as follows:

(1) The 0% tax rate applies to exported goods and services, international transportation, and goods and services not subject to VAT as stipulated in Article 5 of the Law on VAT 2008 when being exported, except for the following cases:

- Technology transfer and intellectual property rights transfer abroad.

- Reinsurance services abroad.

- Credit granting services.

- Capital transfer.

- Derivative financial services.

- Postal and telecommunications services.

- Exported products stipulated in Clause 23 Article 5 of the Law on VAT 2008.

Exported goods and services are those consumed outside Vietnam, in non-tariff zones; goods and services provided to foreign customers as stipulated by the Government of Vietnam.

(2) The 5% tax rate applies to the following goods and services:

- Clean water used for production and daily life.

- Ore for fertilizer production; pest control chemicals and growth stimulants for animals and plants.

- Services of earthwork, dredging canals, ditches, ponds, and lakes for agricultural production; tending, pest control for plants; preliminary processing and storage of agricultural products.

- Unprocessed agricultural, livestock, and aquacultural products, except for those stipulated in Clause 1 Article 5 of this Law.

- Preliminary processed rubber latex; preliminary processed turpentine; nets, ropes, and fibers for making fishing nets.

- Fresh food; unprocessed forest products except timber, bamboo shoots, and the products stipulated in Clause 1 Article 5 of the Law on VAT 2008.

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

- Products made from jute, coconut coir, palm leaves, straw, coconut shells, water hyacinth, and other handicraft products made from agricultural by-products; preliminary processed cotton; newsprint.

- Medical equipment, utensils, bandages, and sanitary napkins; preventive and curative medicines; chemical pharmaceutical products and medicinal herbs used for making preventive and curative medicines.

- Teaching and learning aids, including models, charts, boards, chalk, rulers, compasses, and specialized equipment and tools for teaching, research, and scientific experiments.

- Cultural, exhibition, sports activities; art performances, film production; importation, distribution, and screening of films.

- Toys for children; books of all kinds, except those stipulated in Clause 15 Article 5 of the Law on VAT 2008.

- Scientific and technological services as stipulated by the Law on Science and Technology.

- Sale, lease, and lease-purchase of social housing as stipulated by the Housing Law.

(3) The 8% tax rate applies to some goods and services that receive a VAT reduction (from 10% to 8%) according to Decree 72/2024/ND-CP.

(4) The 10% tax rate applies to goods and services not subject to the 0%, 5%, and 8% tax rates.

Thus, depending on the taxable object, the VAT rate from July 1, 2024, will be 0%, 5%, 10%, or 8%.

What are the applicable VAT rates in Vietnam from July 1, 2024? (Image from the Internet)

Where is VAT in Vietnam paid?

Under the regulations in Article 56 of the Tax Administration Law 2019 regarding the place to pay VAT:

Receiving authorities

1. Taxpayers shall pay tax:

a) at State Treasuries;

b) At the tax authorities that receive the tax declaration dossiers;

c) via a organization authorized by the tax authority to collect tax; or

d) via a commercial bank or credit institution or service provider as prescribed by law.

2. State Treasuries, commercial banks, credit institutions and service providers shall prepare their premises, equipment and personnel to collect tax.

3. Every organization that collects or deduct tax shall provide tax payment documents to taxpayers.

4. Within 08 working hours from the tax collection, the collecting organization shall transfer the collected tax to state budget. The Minister of Finance shall specify the time limit for transfer of tax collected in cash in remote and isolated areas, islands, areas where travel is difficult or collection time is limited.

Simultaneously, following the guidelines in Article 20 of Circular 219/2013/TT-BTC:

Place of tax payment

1. Taxpayers shall declare and pay VAT at the locality where the production and business operations are conducted.

2. Taxpayers who apply the deduction method and have dependent accounting production units located in a different province or municipality from where the head office is located shall declare, pay VAT at the locality where the production unit is located and the locality where the head office is located.

...5. VAT declaration and payment shall be done following the Tax Administration Law and its guiding documents.

Thus, taxpayers shall declare and pay VAT at the locality where the production and business operations are conducted:

- At the State Treasury;

- At the tax administration agency where the tax return is filed;

- Through organizations authorized by the tax administration agency to collect taxes;

- Through commercial banks, credit institutions, and other service organizations as stipulated by law.

Based on the actual operational situation, the suitable location for paying VAT shall be determined according to the mentioned regulations.

Who is required to pay VAT in Vietnam?

Under the provisions in Clauses 1 and 2 of Article 2 of Decree 209/2013/ND-CP on VAT payers:

- Entities liable to VAT are organizations and individuals producing and trading goods and services subject to VAT (hereinafter referred to as business establishments) and organizations and individuals importing goods subject to VAT (hereinafter referred to as importers)

.- Organizations and individuals producing and trading in Vietnam buying services (including services linked with goods) from foreign organizations without permanent establishments in Vietnam, non-resident individuals in Vietnam, then the organizations and individuals buying services are responsible for paying VAT, except for cases not required to declare, calculate, and pay VAT stipulated in Point b, Clause 3, Article 2 of Decree 209/2013/ND-CP.

Note: The regulations on permanent establishments and non-resident individuals in this Clause shall follow the provisions of the Enterprise Income Tax Law and the Personal Income Tax Law.