What is the VAT rate for goods sold at duty-free shops in Vietnam from July 1, 2025?
What is the VAT rate for goods sold at duty-free shops in Vietnam from July 1, 2025?
Based on Point a Clause 1 Article 9 of the Law on Value-Added Tax 2024 (effective from July 1, 2025) regarding goods and services subject to a VAT rate of 0%, the provisions are as follows:
Tax Rate
- The 0% tax rate is applied to the following goods and services:
a) Export goods including: goods from Vietnam sold to organizations or individuals abroad and consumed outside of Vietnam; goods from domestic Vietnam sold to organizations in the non-tariff zone and consumed in the non-tariff zone used directly for export production activities; goods sold in isolation areas to individuals (foreigners or Vietnamese) who have completed exit procedures; goods sold at duty-free shops;
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Thus, from July 1, 2025, goods sold at duty-free shops will be subject to a VAT rate of 0%.
What is the VAT rate for goods sold at duty-free shops in Vietnam from July 1, 2025? (Image from the Internet)
Which entities are not subject to VAT in Vietnam under the new regulations?
Pursuant to Article 5 of the Law on Value-Added Tax 2024 (effective from July 1, 2025) regarding entities not subject to VAT, the provisions include:
(1) Products from plantation crops, farmed forests, livestock, aquaculture, caught fisheries that have not been processed into other products or only through ordinary preliminary processing by organizations and individuals who produce, catch and sell them, and at the import stage.
(2) Breeding animal products as regulated by the law on livestock, breeding plant materials as regulated by the law on cultivation.
(3) Animal feed as provided by the law on livestock; aquatic feed according to the provisions of the law on fisheries.
(4) Salt products produced from seawater, natural rock salt, refined salt, iodized salt whose main component is sodium chloride (NaCl).
(5) State-owned public property housing sold to the tenants.
(6) Irrigation and drainage; plowing, harrowing land; dredging of intra-field canals serving agricultural production; agricultural product harvesting services.
(7) Transfer of land use rights.
(8) Life insurance, health insurance, student insurance, other insurance services related to humans; livestock and crop insurance, other agricultural insurance services; insurance for ships, boats, equipment, and other necessary tools directly serving fishing activities; reinsurance; insurance for oil and gas facilities, equipment, and ships registered in foreign nationality leased by foreign oil and gas contractors or subcontractors to operate in the Vietnamese seas, overlapping seas agreed by Vietnam and adjacent or opposite countries to be placed under joint exploitation policies.
(9) The following financial, banking, securities, and trade services:
- Credit granting services as provided by the laws on credit institutions and the fees specified in the Loan Agreement between the Government of Vietnam and foreign lenders;
- Loan services by taxpayers who are not credit institutions;
- Securities trading includes securities brokerage, self-trading, underwriting, investment advice, fund management, and portfolio management as regulated by the securities laws;
- Capital transfer includes the transfer of part or all of the equity invested in other economic organizations (regardless of whether a new legal entity is established), securities transfers, capital contribution rights transfers, and other forms of capital transfer as provided by the law, including cases of selling an enterprise to another enterprise for production and business whereby the acquiring enterprise inherits all rights and obligations of the selling enterprise according to the law. Capital transfer as regulated does not include investment project transfer or asset sales;
- Debt selling including selling the payable and receivable accounts;
- Foreign currency trading;
- Derivatives products as provided by laws on credit institutions, securities, and trade, including: interest rate swaps; forward contracts; futures contracts; options contracts for buying and selling and other derivative products;
- Selling secured assets of an outstanding debt of an organization wholly owned by the State established by the Government of Vietnam to purchase, sell debts to manage non-performing loans of Vietnamese credit institutions.
(10) The following health care, veterinary services:
- Health services include: medical examination, treatment, and disease prevention for people, family planning services, health care, rehabilitation for patients; elderly, disabled people care services; patient transportation, hospital room rental services, hospital beds of health facilities; testing, X-ray, imaging; blood and blood products for patients.
- Care services for the elderly, disabled people including medical, nutrition care, and organization of cultural, sports, recreation, physical therapy, and rehabilitation activities for the elderly and disabled people.
In cases within the treatment service package as prescribed by the Ministry of Health, including the use of medicinal products, proceeds from medicinal products within the treatment package are also not subject to VAT;
- Veterinary services include: medical examination, treatment, and disease prevention for animals.
(11) Funeral services.
(12) Maintenance, repair, construction activities funded by people's contributions, humanitarian aid capital (constituting over 50% of the total capital used for the work or more) for historical-cultural relics, scenic spots, cultural, artistic projects, public service structures, infrastructure projects, and housing for social policy beneficiaries.
(13) Teaching and vocational training activities as provided by the laws on education, vocational education.
(14) Broadcasting of radio, television funded by the state budget.
(15) Publishing, importing, distributing newspapers, journals, bulletins, special publications, political books, textbooks, textbooks, legal documents, scientific-technical books, books serving external information, books printed in minority languages, and propaganda posters, including in the form of tapes or recorded discs, recorded images, electronic data; currency, printing money.
(16) Public passenger transportation by bus, train, and domestic waterway.
(17) Machinery, equipment, spare parts, supplies that are not yet produced in the country need to be imported for direct use in scientific research, technology development activities; machinery, equipment, spare parts, specialized transport, and supplies that are not yet produced in the country need to be imported to carry out oil and gas field exploration and development activities; aircraft, helicopters, gliders, rigs, and ships that are not yet produced in the country needed for fixed assets of enterprises or leased from foreign countries for production, business, leasing.
(18) Defense, security products under the list issued by the Minister of National Defense, Minister of Public Security; imported products, services used for defense and security industries according to the list issued by the Prime Minister of the Government of Vietnam.
(19) Imported goods in the case of humanitarian aid, non-refundable aid. Goods, services sold to organizations, individuals abroad, and international organizations for humanitarian aid, non-refundable aid to Vietnam.
(20) Goods transshipped, transited through Vietnam’s territory; temporary imported goods for re-exportation; temporary exported goods for re-importation; raw materials imported for production, processing of goods for export as per the production, processing, and export contract signed with a foreign party; goods, services purchased and sold between foreign countries and non-tariff zones and among non-tariff zones.
Imported goods from abroad by leasing companies are directly transported to the non-tariff area for financial leasing by enterprises in the non-tariff area.
(21) Technology transfer as regulated by the Law on Technology Transfer; intellectual property rights transfer as regulated by the Law on Intellectual Property; software products and software services as regulated by the law.
(22) Gold in the form of bars, pieces that have not been crafted into artistic products or jewelry or other products at the import stage.
(23) Export products are natural resources, minerals exploited that have not been processed into other products or those processed into other products as per the List prescribed by the Government of Vietnam in line with the state direction on not encouraging export, limiting export of raw natural resources, and minerals.
(24) Artificial products used to replace human body parts, including products that are long-term body implants; crutches, wheelchairs, and other specialized tools for the disabled.
(25) Goods, services of households, individual business entities with annual revenue up to 200 million VND or less; assets of organizations, individuals not engaging in business, not subject to VAT selling; goods from national reserves sold; collections of charges and fees as prescribed by the law on fees and charges.
(26) Imported goods in the following cases:
- Gifts for governmental agencies, political organizations, socio-political organizations, socio-political-professional organizations, social organizations, social-professional organizations, people’s armed forces units within the import tax exemption limit as regulated by the law on export tax, import tax;
- Gifts within the import tax exemption limit as regulated by the law on export tax, import tax granted by foreign organizations, individuals to Vietnamese individuals; items of foreign organizations, individuals rated as per diplomatic immunity and relocated assets within the import tax exemption limit as regulated by the law on export tax, import tax;
- Goods under the duty-free luggage allowances as prescribed by the law on export tax, import tax;
- Goods imported for support, sponsorship for disaster, epidemic, war consequence prevention, control, and recovery as prescribed by the Government of Vietnam;
- Goods traded, exchanged across borders for production, consumption of border residents under the list of goods traded, exchanged by border residents as prescribed by the law and within the import tax exemption limit as prescribed by the law on export tax, import tax;
- Relics, artifacts, national treasures as prescribed by the law on cultural heritage imported by competent state authorities.
When is the determination of VAT in Vietnam according to the new regulation?
Pursuant to Article 8 of the Law on Value-Added Tax 2024 (effective from July 1, 2025), the timing of VAT determination is provided as follows:
- For goods, it is the time of transfer of ownership or right to use goods to the purchaser, or the time of invoicing, regardless of whether the money has been collected or not;
- For services, it is the time of completion of service provision or the time of invoicing service provision, regardless of whether money has been collected or not.
Additionally, the timing of VAT determination for the following goods and services is prescribed by the Government of Vietnam:
+ Export and import goods;
+ Telecommunication services;
+ Insurance business services;
+ Electricity supply activities, clean water production and supply activities;
+ Real estate business activities;
+ Construction, installation, and oil and gas activities.
