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

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

Based on Article 8 of the Law on Value-Added Tax 2024 (effective from July 1, 2025), specific provisions on the determination of VAT are as follows:

[1] The time for determining value-added tax is specified as follows:

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

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

[2] The time for determining VAT for the following goods and services shall be prescribed by the Government of Vietnam:

- Exported goods, imported goods;

- Telecommunications services;

- Insurance business services;

- Electricity supply, electricity production, clean water activities;

- Real estate business activities;

- Construction, installation, and petroleum activities.

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

What are regulations on the taxable value for VAT in Vietnam?

Based on Article 7 of the Law on Value-Added Tax 2024, specific provisions on taxable value for VAT are as follows:

[1] The taxable value is specified as follows:

- For goods, services sold by the business establishment, it is the selling price excluding VAT; for goods, services subject to special consumption tax, it is the selling price including special consumption tax but excluding VAT; for goods subject to environmental protection tax, it is the selling price including environmental protection tax but excluding VAT; for goods subject to both special consumption tax and environmental protection tax, it is the selling price including both taxes but excluding VAT;

- For imported goods, it is the import tax calculation value according to the export and import tax law, plus import tax, and any supplemental import tax (if any), plus special consumption tax (if any), and plus environmental protection tax (if any);

- For goods, services used for exchange, internal consumption, gifting, donation, it is the taxable value of similar or equivalent goods, services at the time of these activities. For promotional goods, services according to the law on commerce, the taxable value is set to zero (0);

- For asset leasing activities, it is the rental fee excluding VAT. If leasing payments are made periodically or in advance, the taxable value is the periodic or prepaid rental fee excluding VAT;

- For goods sold through installment, deferred payment, it is the value calculated at the one-time payment price excluding VAT, not including installment or deferred interest;

- For processing goods, it is the processing fee excluding VAT;

- For construction, installation activities, it is the value of the project, work item, or part handed over excluding VAT. If construction, installation does not include materials, machinery, equipment, the taxable value does not include the value of materials and machinery, equipment;

- For real estate business activities, it is the selling price of real estate excluding VAT, deducted by land levy or land rent paid to the state budget (deducted land price). The Government of Vietnam prescribes the determination of deducted land price as per the land law;

- For agency, brokering in sales of goods and services for commission, it is the commission received excluding VAT;

- For goods, services using invoices that record the payment price including VAT, the taxable value is determined by the following formula:

- For casino operation services, rewarded electronic gaming services, betting, it is the money earned from these activities minus the amount exchanged back for unused customer and the winnings paid to customers (if any), which includes special consumption tax, excluding VAT;

- For various production, business activities such as electricity production by Vietnam Electricity Group; transportation, loading; travel services in the form of tours; pawn services; books subject to VAT sold at published price (cover price); printing activities; agency inspecting, agency claiming compensation, agency claiming recompensation for third party, and agency handling 100% compensation with commission or service fees are taxable excluding VAT. The Government of Vietnam prescribes the taxable value for these production, business activities.

[2] The taxable value for goods, services as specified in Clause 1 Article 7 of the Law on Value-Added Tax 2024 includes all surcharges and additional fees that the business establishment is entitled to.

Which entities are value-added taxpayers in Vietnam?

Based on Article 4 of the Law on Value-Added Tax 2024, specific provisions on VAT taxpayers are as follows:

- Organizations, households, individuals producing, trading goods, services subject to VAT (hereinafter referred to as business establishments).

- Organizations, individuals importing goods subject to VAT (hereinafter referred to as importers).

- Organizations, individuals operating in Vietnam purchasing services (including services associated with goods) from foreign organizations without a permanent establishment in Vietnam, individuals abroad not residing in Vietnam, except as provided in Clauses 4 and 5 Article 4 of the Law on Value-Added Tax 2024; organizations operating in Vietnam purchasing goods, services for exploration, development, exploitation activities in petroleum of foreign organizations without a permanent establishment in Vietnam, individuals abroad not residing in Vietnam.

- Foreign providers without a permanent establishment in Vietnam conducting e-commerce, digital platform transactions with organizations, individuals in Vietnam (hereinafter referred to as foreign providers); organizations managing foreign digital platforms deducting, paying taxes on behalf of foreign providers; organizations operating in Vietnam applying the VAT credit method buying services from foreign providers without a permanent establishment in Vietnam through e-commerce or digital platforms applying tax withholding, paying on behalf of foreign providers.

- Organizations managing e-commerce platforms, digital platforms with payment functions executing tax deductions, payments on behalf of and declaring deducted tax for business households, individuals trading on e-commerce platforms, digital platforms.