What goods and services are subject to VAT in Vietnam when the 2024 Law on Value Added Tax comes into force from July 1, 2025?

What goods and services are subject to VAT in Vietnam when the 2024 Law on Value Added Tax comes into force from July 1, 2025?

Pursuant to the provisions of Article 5 of the 2024 Law on Value Added Tax Download (effective from July 1, 2025), it stipulates 26 entities exempt from tax under the current new law, including:

1. Products such as planted crops, afforested trees, livestock, aquaculture, fishing...

2. Breeding stock...

3. Animal feed...

4. Salt products manufactured from seawater...

5. State-owned public property housing sold by the State to current tenants.

6. Irrigation and drainage; plowing and harrowing land...

7. Life insurance, health insurance, student insurance...

8. Financial services, banking, securities trading, commerce...

9. Medical and veterinary services...

10. Funeral services.

11. Maintenance, repair, construction funded by public contributions...

12. Teaching and vocational training as per regulations concerning education and vocational training...

13. Radio and television broadcasting funded by the state budget.

14. Publishing, importing, and circulating newspapers, magazines, bulletins, and special editions...

15. Public passenger transport by bus, tram, and inland watercraft.

16. Machinery, equipment, spare parts...

17. Defense and security products...

18. Imported goods as humanitarian aid...

19. Goods in transit, transshipment through Vietnamese territory...

20. Technology transfer as per the Law on Technology Transfer...

21. Gold in the form of bullion and other non-jewelry items at the importation stage...

22. Export products that are resources...

23. Artificial products used to replace human body parts...

24. Goods and services of households...

25. Imported goods...

Thus, compared to the current provisions in Article 5 of the 2008 Law on Value Added Tax , the following items will fall within the non-taxable category, but certain entities will be subject to VAT when the 2024 Law on Value Added Tax comes into force from July 1, 2025, including:

[1] Securities deposit; market-organizing services of the stock exchange or securities trading center; other securities trading activities as prescribed by securities laws.

[2] Fertilizers; specialized machinery and equipment for agricultural production; offshore fishing vessels.

[3] Export products that are resources and extracted minerals processed into other non-VAT subject products must comply with the list stipulated by the Government of Vietnam.

Furthermore, according to the 2008 Law on Value Added Tax , products exported from goods processed from resources and minerals where the total value of resources and minerals together with energy costs account for 51% or more of the product cost fall under non-taxable VAT entities.

Additionally, when the 2024 Law on Value Added Tax Download comes into effect, the imported goods donated or sponsored for natural disaster, epidemic, and war control, as stipulated by the Government of Vietnam, will be counted as non-VAT entities.

What goods and services are subject to VAT in Vietnam when the 2024 Law on Value Added Tax comes into force from July 1, 2025? (Image from Internet)

What are regulations on taxable prices when the 2024 Law on Value Added Tax comes into force from July 1, 2025?

According to Article 7 of the 2024 Law on Value Added Tax Download, the provisions are as follows:

- The taxable price is defined as follows:

+ For goods and services sold by businesses, it is the sale price excluding value-added tax; for goods and services subject to special consumption tax, it is the sale price inclusive of the special consumption tax but excluding VAT; for goods subject to environmental protection tax, it is the sale price inclusive of environmental protection tax but excluding VAT; for goods subject to both special consumption tax and environmental protection tax, it is the sale price inclusive of both but exclusive of VAT;

+ For imported goods, it is the import taxable value as stipulated by export and import tax laws, including import tax plus any additional import duties according to the law (if any), plus special consumption tax (if any), and plus environmental protection tax (if any);

+ For goods and services used for exchange, internal consumption, gift, or donation, the taxable value is the VAT-excluded price of similar or equivalent goods and services at the time these activities occur.

For goods and services promoted according to commercial law, the taxable price is determined as zero (0);

+ For property rental activities, it is the rental value excluding VAT.

If the lease is paid periodically or prepaid for the lease term, the taxable price is the payment per period or prepaid amount for the lease term excluding VAT;

+ For goods sold on installment, deferred payment is priced at the one-time payment selling price excluding VAT, not including installment or deferred payment interest;

+ For product processing, it is the processing price excluding VAT;

+ For construction and installation activities, it is the value of the project, project items, or work accomplished excluding VAT. For construction and installation without materials and equipment included, the taxable price is the construction and installation value excluding materials and equipment;

+ For real estate business activities, it is the selling price of real estate excluding VAT minus land levy or land rent paid to the state budget (deducted land price). The Government of Vietnam stipulates the determination of deducted land prices as per this point in accordance with land law;

+ For agency, brokerage activities for the sale of goods and services earning a commission, it is the commission earned from these activities excluding VAT;

+ For goods and services using invoices recording payment prices inclusive of VAT, the taxable price is determined by the formula:

Price excluding VAT = Payment price / (divided by) 1 + tax rate of goods, services (%)

+ For casino business activities, prize-winning video games, betting activities, it is the amount obtained from these activities minus the amount exchanged for unused vouchers, and prize payments to customers (if any), inclusive of special consumption tax, excluding VAT;

+ For production, business activities including: electricity production by EVN; transportation and loading services; tourism services in the form of travel agency; pawnbroking services; VAT-subject books sold at the publishing (cover price); printing activities; agency appraisal services, agency claims handling, third-party indemnity claims processing, and agency handling of 100% indemnity goods earning salary or commission, the taxable price is the selling price excluding VAT. The Government of Vietnam stipulates the taxable price for production and business activities mentioned herein.

- The taxable price for goods and services stipulated in clause 1 of this Article includes all surcharges and additional fees that the business entity is entitled to receive.

- The Government of Vietnam provides detailed regulations for this Article.

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

Pursuant to Article 7 of the 2024 Law on Value Added Tax Download, it provides the following regulations:

- The time for calculating VAT is stipulated as follows:

+ For goods, it is the time when ownership or right to use of goods is transferred to the buyer or the time of issuing invoices, irrespective of the receipt of payment;

+ For services, it is the time of service completion or the time of issuing service provision invoices, irrespective of the receipt of payment.

- The time for calculating VAT for the following goods and services is prescribed by the Government of Vietnam:

+ Exported and imported goods;

+ Telecommunications services;

+ Insurance business services;

+ Electricity supply, production, and clean water activities;

+ Real estate business activities;

+ Construction, installation, and oil and gas activities.

*Note: The 2024 Law on Value Added Tax (effective from July 1, 2025)

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***Note: **The 2024 Law on Value Added Tax comes into force from July 1, 2025, except as stipulated in clause 2, Article 18 of the 2024 Law on Value Added Tax .

- The provisions regarding revenue levels for households, individuals engaged in production and business activities falling under non-taxable entities as per clause 25 Article 5 of this Law and Article 17 of the 2024 Law on Value Added Tax come into effect from January 1, 2026.

- The 2008 Law on Value Added Tax , as amended and supplemented by Law No. 31/2013/QH13, Law No. 71/2014/QH13, and Law No. 106/2016/QH13, ceases to be effective from the date the 2024 Law on Value Added Tax becomes effective.