What VAT rate applies to water for daily life in Vietnam from July 1, 2025?

What VAT rate applies to water for daily life in Vietnam from July 1, 2025?

According to Clause 2, Article 9 of the Law on Value-Added Tax 2024 is prescribed as follows:

Tax Rate

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2. The tax rate of 5% applies to the following goods and services:

a) Clean water for production and daily life, excluding bottled, canned drinking water and other types of beverages;

b) Fertilizers, ores for fertilizer production, pesticides, and livestock growth stimulants as prescribed by law;

c) Services of dredging, digging channels, ditches, ponds for agricultural production; cultivation, care, pest control for crops; preliminary processing, preservation of agricultural products;

d) Products from crops, planted forests (except wood, bamboo shoots), livestock, aquaculture, and caught fish not yet processed into other products or only undergone ordinary preliminary processing, except products specified in Clause 1, Article 5 of this Law;

dd) Natural rubber in the form of crepe rubber, sheet rubber, latex, rubber crumbs; nets, netting lines, and fibers for weaving fishing nets;

e) Products made from jute, rush, bamboo, rattan, leaves, straw, coconut shells, water hyacinth, and other handicraft products made from agricultural waste; cotton fiber that has been carded, well-carded; newsprint;

g) Equipment for fishing in the sea; specialized machinery and equipment for agricultural production as prescribed by the Government of Vietnam;

h) Medical equipment as prescribed by law on medical equipment management; preventive medicine, curative medicine; medicinal substances, and herbs that are raw materials for producing preventive and curative medicines;

i) Equipment for teaching and learning, including models, drawings, boards, chalk, rulers, compasses;

k) Activities of traditional and folk performing arts;

l) Toys for children; books of all kinds, except books specified in Clause 15, Article 5 of this Law;

m) Scientific and technological services as prescribed by the Law on Science and Technology;

n) Sale, lease, lease-purchase of social housing as prescribed by the Housing Law.

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According to these regulations, if water for daily life does not include bottled, canned drinking water and other types of beverages, it will be subject to a 5% VAT rate starting July 1, 2025.

What VAT rate applies to water for daily life in Vietnam from July 1, 2025?(Image from Internet)

Which entity is a taxpayer in Vietnam according to the Law on Value-Added Tax 2024?

According to Article 4 of the Law on Value-Added Tax 2024, taxpayers are specified as follows:

(1) Organizations, households, and individuals producing and trading goods and services subject to value-added tax (hereinafter referred to as business establishments).

(2) Organizations and individuals importing goods subject to value-added tax (hereinafter referred to as importers).

(3) Organizations and individuals producing and trading in Vietnam that purchase services (including services associated with goods) from foreign organizations without a permanent establishment in Vietnam and individuals abroad who are non-residents in Vietnam, except as specified in (4) and (5); organizations producing and trading in Vietnam that purchase goods and services for conducting exploration, exploitation, and development of oil and gas fields from foreign organizations without a permanent establishment in Vietnam and individuals abroad who are non-residents in Vietnam.

(4) Foreign suppliers without a permanent establishment in Vietnam engaged in e-commerce business, business based on digital platforms with organizations and individuals in Vietnam (hereinafter referred to as foreign suppliers); organizations that are managers of foreign digital platforms are required to withhold and pay the tax obligations of the foreign suppliers; business organizations in Vietnam applying the tax deduction method for value-added tax purchasing services from foreign suppliers without a permanent establishment in Vietnam through e-commerce or digital platforms are required to withhold and pay the tax obligations of the foreign suppliers.

(5) Organizations that are managers of e-commerce platforms or digital platform managers with payment functions must withhold, remit tax on behalf of, and file tax declarations for the withholding tax amount for business households and individuals on e-commerce platforms and digital platforms.

The Government of Vietnam prescribes details for (1), (4), (5); prescribes taxpayers in cases where foreign suppliers provide services to buyers who are business organizations in Vietnam applying the tax deduction method as specified in (4).

The Law on Value-Added Tax 2024 takes effect on July 1, 2025, except for cases regarding revenue thresholds for individuals and households involved in production and business not subject to tax at Clause 25, Article 5 of the Law on Value-Added Tax 2024 and Article 17 of the Law on Value-Added Tax 2024, which take effect on January 1, 2026.

What are prohibited acts in tax deduction and refund in Vietnam from July 1, 2025?

According to Article 13 of the Law on Value-Added Tax 2024, the following acts are prohibited in tax deduction and refund:

- Buying, giving, selling, organizing advertising, brokering the buying and selling of invoices.

- Creating transactions for the purchase and sale of goods, and provision of services that do not exist or are contrary to the law.

- Making invoices for selling goods or providing services during business suspension, except for issuing invoices to customers for contracts signed before the business suspension notice.

- Using illegal invoices and documents, unauthorized use of invoices and documents as prescribed by the Government of Vietnam.

- Failing to transfer electronic invoice data to tax authorities as prescribed.

- Tampering with, misusing, unauthorized accessing, or destroying information systems related to invoices and documents.

- Giving, accepting, mediating bribes, or engaging in other acts related to invoices and documents to obtain tax deduction, tax refund, tax appropriation, or evasion of value-added tax.

- Colluding, covering; collusion between tax administration officials, tax authorities, business establishments, importers, and between business establishments and importers in the use of illegal invoices and documents, unauthorized use of invoices and documents to obtain tax deduction, tax refund, tax appropriation, and evading value-added tax.

The Law on Value-Added Tax 2024 was passed by the National Assembly and becomes effective from July 1, 2025, except for cases regarding revenue thresholds for individuals and households involved in production and business not subject to tax at Clause 25, Article 5 of the Law on Value-Added Tax 2024 and Article 17 of the Law on Value-Added Tax 2024, which take effect on January 1, 2026.