Which goods and services are not subject to VAT in Vietnam?

Which goods and services are not subject to VAT in Vietnam?

Under Article 5 of the Law on Value-Added Tax 2008, as amended by Clause 1, Article 1 of the Amendments to the Law on Value-Added Tax, the Law on Special Consumption Tax, and the Law on Tax Administration 2016, Clause 1, Article 1 of the Amendments to the Law on Value-Added Tax 2013, and supplemented by Clause 1, Article 3 of the Law on Amendments to Tax Laws 2014, the goods and services not subject to VAT in Vietnam include:

- Farming, breeding, aquaculture produces that have not been processed into other products or have only been preliminary processed by the manufacturers or catchers when they are sold and imported.

Enterprises and cooperatives buying farming, breeding, aquaculture produces that have not been processed into other products or have only been preliminary processed and selling them to other enterprises or cooperatives are not required to declare and pay VAT but may deduct input VAT.

- Products which are animal breeds and plant varieties, including breeding eggs, breeding animals, seedlings, seeds, sperms, embryos and genetic materials.

- Irrigation and drainage; soil ploughing and harrowing; dredging of intra-field canals and ditches for agricultural production; services of harvesting farm produce.

- Fertilizers, specialized machinery and equipment serving agricultural production; offshore fishing vessels; feed for cattle, poultry, and other animals;

- Salt products made of seawater, natural rock salt, refined salt and iodized salt.

- State-owned residential houses sold by the State to current tenants.

- Transfer of land use rights;

- Life insurance, student insurance, insurance on domestic animals, insurance on plants and reinsurance.

- Credit provision services; securities trading; capital transfer; derivative financial services, including interest-rate swap contracts, forward contracts, futures contracts, call or put options, foreign currency sales, and other derivative financial services as prescribed by law.

- Health services, veterinary medicine services including medical examination and treatment services for human and animals; care services for elderly people and disabled people.

- Public post and telecommunications and universal Internet services under the Governments programs.

- Public services on sanitation and water drainage in streets and residential areas; maintenance of zoos, flower gardens, parks, street greeneries and public lighting; funeral services;

- Renovation, repair and construction of cultural, artistic, public service and infrastructure works and residential houses for social policy beneficiaries, which are funded with peoples contributions or humanitarian aid.

- Teaching and vocational training as provided for by law.

- State budget-funded radio and television broadcasting.

- Publication, import and distribution of newspapers, journals, specialized bulletins, political books, textbooks, teaching materials, law books, scientific-technical books, books printed in ethnic minority languages as well as propaganda postcards, pictures and posters, including those in the form of audio or visual tapes or discs or electronic data; money printing.

- Mass transit by bus and tramcar.

- Machinery, equipment and supplies which cannot be manufactured at home and need to be imported for direct use in scientific research and technological development activities; machinery, equipment, spare parts, special-purpose means of transport and supplies which cannot be manufactured at home and need to be imported for prospecting, exploring and developing oil and gas fields; aircraft, drilling platforms and ships which cannot be manufactured at home and need to be imported for the formation of enterprises fixed assets or which are hired from foreign parties for production and business activities or for lease.

- Special-purpose weapons and military equipment for security and defense purposes.

- Goods imported as humanitarian aid or non-refundable aid; gifts for state agencies, political organizations, socio-political organizations, socio-political-professional organizations, social organizations, socio-professional organizations or peoples armed forces units; donations or gifts for Vietnam-based individuals within the Government-prescribed quotas; belongings of foreign organizations and individuals within diplomatic immunity quotas; and personal effects within duty-free luggage quotas.

Goods and services sold to foreign organizations or individuals or international organizations for use as humanitarian aid, and non-refundable aid to Vietnam.

- Goods transferred out of border gate or transited via the Vietnamese territory; goods temporarily imported for re-export; goods temporarily exported for re-import; raw materials imported for the production or processing of goods for export under contracts signed with foreign parties; goods and services traded between foreign countries and non-tariff areas and between non-tariff areas.

- Technology transfer under the Law on Technology Transfer; transfer of intellectual property rights under the Law on Intellectual Property; computer software.

- Gold imported in the form of bars or ingots which have not yet been processed into fine-art articles, jewelries or other products.

- Exports that are raw natural resources or minerals which have not been processed into other products; exports that are goods processed from natural resources or minerals where the total value of natural resources or minerals plus energy costs makes up at least 51% of the product price.

- Artificial products used for the substitution of diseased peoples organs; crutches, wheelchairs and other tools used exclusively for the disabled.

- Goods and services of business individuals who have a monthly income lower than the common minimum salary level applicable to domestic organizations and enterprises.

Establishments trading in non-taxable goods or services specified in Article 5 of the Law on Value-Added Tax 2008 are not entitled to input value-added tax credit or refund, except the cases subject to the tax rate of 0% specified in Clause 1, Article 8 of the Law on Value-Added Tax 2008.

Which goods and services are not subject to VAT in Vietnam? (Image from Internet)

What are the bases for calculating VAT​ in Vietnam?

Pursuant to Article 6 of the Law on Value-Added Tax 2008, the basis for calculating value-added tax is the taxable price and the tax rate.

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

Pursuant to Article 7 of the Law on Value-Added Tax 2008, as amended by Clause 2, Article 1 of the Law on Amendments to the Law on Value-Added Tax 2013 and Point c, Clause 2, Article 6 of the Law on Amendments to Tax Laws 2014, the taxable prices for value-added tax are regulated as follows:

- The taxable price is specified as follows:

+ Taxable prices of goods and services are VAT-exclusive prices; taxable prices of goods and services subject to special excise duty are the prices inclusive of subscriber information and exclusive of VAT; taxable prices of goods subject to environmental protection tax are prices inclusive of environmental protection tax and exclusive of VAT; taxable prices of goods subject to special excise duty and environmental protection tax are prices inclusive of special excise duty and environmental protection tax and exclusive of VAT;

+ Taxable prices of imported goods are prices at the border checkpoint plus import tax (if any) plus special excise duty (if any) plus environmental protection tax (if any). Import prices at the border checkpoint shall be determined in accordance with the regulations on taxable prices of imported goods;

+ For goods and services used for barter, internal consumption or donation, the taxable price is the price for calculating value-added tax on goods and services of the same or equivalent kinds at the time of barter, consumption or donation;

+ Taxable prices of the lease of property are the rents exclusive of VAT.

If the rent is paid in instalments or paid in advance for a certain period of time, the taxable price is the instalment or the advanced payment exclusive of VAT;

+ For goods sold by mode of installment or deferred payment, the taxable price is the lump-sum selling price of such goods, exclusive of value-added tax, excluding the interest on installment or deferred payment;

+ For goods processing, the taxable price is the processing remuneration exclusive of value-added tax;

+ For construction and installation activities, the taxable price is the value of the handed-over work, work item or job, exclusive of value-added tax. If construction or installation activities do not cover materials, machinery or equipment, the taxable price is the construction or installation value, excluding the value of materials, machinery or equipment;

+ For real estate trading, the taxable price is the real estate-selling price exclusive of value-added tax, excluding the charge for transferring land use rights or the land rent remittable into the state budget;

+ For commission-enjoying goods or service trading agency and brokerage, the taxable price is the commission on these activities, exclusive of value-added tax;

+ For goods and services for which payment documents indicating payment prices inclusive of value-added tax are used, the taxable price is determined according to the following formula:

- Taxable prices of goods and services specified in Clause 1 of Article 7 of the Law on Value-Added Tax 2008 include surcharges and additional charges to be enjoyed by business establishments.

- Taxable prices are determined in Vietnam dong. In case taxpayers have foreign currency turnover, such turnover must be converted into Vietnam dong at the average exchange rate on the inter-bank foreign currency market, announced by the State Bank of Vietnam at the time turnover is generated, for the determination of taxable prices.