When is the time for determination of VAT for goods in Vietnam according to the Law on Value-Added Tax 2024?

When is the time for determination of VAT for goods in Vietnam according to the Law on Value-Added Tax 2024?

Based on Article 8 of the Law on Value-Added Tax 2024 (effective July 1, 2024), the determination of VAT timing is as follows:

Time for determination of VAT

1. The timing for determining value-added tax is defined as follows:

a) For goods, it is the time of transfer of ownership or right to use the goods to the purchaser or the time of issuing the invoice, regardless of whether the payment has been received or not;

b) For services, it is the time of completion of the service provision or the time of issuing the service provision invoice, regardless of whether the payment has been received or not.

2. The timing for determining value-added tax for the following goods and services is regulated by the Government of Vietnam:

a) Exported goods, imported goods;

b) Telecommunication services;

c) Insurance business services;

d) Electricity supply activities, electricity production, and clean water activities;

đ) Real estate business activities;

e) Construction, installation, and oil and gas activities.

Thus, according to the Law on Value-Added Tax 2024, the time for determining VAT on goods is the time of transfer of ownership or right to use the goods to the purchaser or the time of issuing the invoice, regardless of whether the payment has been received or not.

When is the time for determination of VAT for goods in Vietnam according to the Law on Value-Added Tax 2024? (Image from the Internet)

Which types of goods are entitled to a 0% VAT rate in Vietnam?

Under Article 8 of the Law on Value-Added Tax 2024, the 0% VAT rate applies to the following goods:

(1) Exported goods including:

- Goods from Vietnam sold to organizations, individuals abroad and consumed outside of Vietnam;

- Goods from domestic Vietnam sold to organizations in non-tariff zones and consumed in non-tariff zones directly serving export production activities;

- Goods sold in isolated areas to individuals (foreigners or Vietnamese) who have completed exit procedures; goods sold at duty-free shops;

(2) Other exported goods including:

- International transportation;

- Construction and installation activities abroad or in non-tariff zones;

- Digital content products provided to foreign parties with documentation proving consumption outside of Vietnam as prescribed by the Government of Vietnam;

- Spare parts, materials for the foreign party to repair, maintain means, machinery, equipment and consumed outside Vietnam; processed goods for onward export as prescribed by law;

- Goods and services subject to non-VAT when exported, except for cases where the 0% rate does not apply such as: technology transfer, transfer of intellectual property rights abroad; reinsurance services abroad; credit granting services; capital transfer; derivative products; postal and telecommunication services; exported products as stipulated in Clause 23, Article 5 of the Law on Value-Added Tax 2024; tobacco, alcohol, beer imported for export; gasoline, oil purchased domestically sold to enterprises in non-tariff zones; automobiles sold to organizations, individuals in non-tariff zones.

What are the conditions for deducting VAT on exported goods in Vietnam?

According to Clause 2, Article 14 of the Law on Value-Added Tax 2024, the conditions for deducting input VAT are as follows:

Input Value-Added Tax Deduction

...

2. The conditions for deducting input VAT are defined as follows:

a) There must be a value-added tax invoice for purchased goods and services or proof of VAT payment at the import stage or proof of VAT payment on behalf of the foreign side as stipulated in Clauses 3 and 4, Article 4 of this Law. The Minister of Finance stipulates proof of VAT payment on behalf of the foreign side;

b) There must be proof of non-cash payment for purchased goods and services, except for specific cases as stipulated by the Government of Vietnam;

c) For exported goods and services, in addition to the conditions specified at points a and b of this clause, there must also be: a contract with the foreign party regarding the sale, processing of goods, provision of services; a sales invoice for goods and services; proof of non-cash payment; customs declaration for exported goods; packing list, bill of lading, insurance documents for goods (if any). The Government of Vietnam stipulates the conditions for deduction in the case of exporting goods via foreign e-commerce platforms and some other special cases.

...

Thus, from July 1, 2025, the conditions for deducting input VAT on goods are as follows:

- There must be a VAT invoice for purchased goods or proof of VAT payment on behalf of the foreign side.

- There must be proof of non-cash payment for purchased goods, except for specific cases as stipulated by the Government of Vietnam.

- A contract with the foreign party regarding the sale or processing of goods.

- A sales invoice for goods.

- Proof of non-cash payment.

- Customs declaration for exported goods.

- Packing list, bill of lading, insurance documents for goods (if any).

Note: Conditions for deduction in the case of exporting goods via foreign e-commerce platforms and some other special cases will be regulated by the Government of Vietnam.