What is the value-added tax rate for construction in Vietnam from July 1, 2025?

What do construction include?

Based on Clause 21, Article 3 of the Law on Construction 2014, construction include urban and rural planning, preparing construction investment projects, conducting construction surveys, designing construction, executing construction work, supervising construction, managing projects, selecting contractors, accepting, handing over works for exploitation and use, warranty, maintenance of construction works, and other activities related to construction.

What is the value-added tax rate for construction in Vietnam from July 1, 2025? (Image from the Internet)

What is the value-added tax rate for construction in Vietnam from July 1, 2025?

Pursuant to Clause 12, Article 5 of the Law on Value-Added Tax 2024, the subjects not subject to VAT rates include:

Subjects not subject to tax

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12. Maintenance, repair, construction funded by contributions from the public sources or humanitarian aid (accounting for 50% or more of the total funds used for the project) for historical and cultural relics, scenic spots, cultural, art, public service structures, infrastructure, and housing for social policy beneficiaries.

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At the same time, according to Point c, Clause 1, Article 9 of the Law on Value-Added Tax 2024, it is stipulated as follows:

Article 9. Tax rates

1. A tax rate of 0% applies to the following goods and services:

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c) Other export goods and services include: international transportation; leasing transportation means used outside Vietnamese territory; aviation and maritime services directly or through agents for international transport; construction and installation activities abroad or in non-tariff zones; digital content products provided to foreign parties with documentation proving consumption outside Vietnam as regulated by the Government of Vietnam; spare parts, materials for repair and maintenance of vehicles, machinery, and equipment for foreign parties consumed outside Vietnam; goods for further processing for export, in accordance with the law; goods and services not subject to VAT when exported, except for cases not applying the 0% tax rate specified in point d of this clause;

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Thus, the value-added tax rate for construction from July 1, 2025, will be determined as follows:

(i) Construction and installation activities abroad or in non-tariff zones will be subject to a 0% tax rate.

(ii) Maintenance, repair, construction funded by public contributions or humanitarian aid (accounting for 50% or more of the total funds used for the project) for historical-cultural relics, scenic spots, cultural, art, public service works, infrastructure, and housing for social policy beneficiaries will not be subject to VAT.

(iii) Other construction that do not fall under the two previous cases (i) and (ii), including services provided by foreign suppliers without a permanent establishment in Vietnam to organizations, individuals in Vietnam via e-commerce and digital platforms, will be subject to a 10% tax rate.

What is the taxable value for value-added tax on construction in Vietnam from July 1, 2025?

Pursuant to Point g, Clause 1, Article 7 of the Law on Value-Added Tax 2024 on the taxable value for value-added tax, it is prescribed as follows:

Taxable value

1. The taxable value is defined as follows:

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g) Regarding construction and installation activities, it is the value of the project, project component, or portion of the work handed over without including VAT. In case of construction and installation excluding materials, machinery, and equipment, the taxable value is the value of construction and installation excluding the value of materials and machinery, and equipment;

h) For real estate business activities, it is the sale price of real estate not including VAT minus the land levy or land rent paid to the state budget (deductible land value). The Government of Vietnam regulates the determination of deductible land value in accordance with the land law;

i) For agency, brokerage activities selling goods and services receiving commissions, it is the commission collected from these activities not including VAT;

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2. The taxable value for goods and services specified in Clause 1 of this Article includes any surcharges and additional fees the business is entitled to receive.

3. The Government of Vietnam provides detailed regulations on this Article.

Thus, the taxable value for value-added tax on construction and installation activities is the value of the project, project component, or portion of the work handed over without including VAT.

In cases of construction and installation excluding materials, machinery, and equipment, the taxable value is the value of construction and installation excluding the value of materials and machinery, and equipment.