List of goods and services subject to 5% and 10% VAT in Vietnam

Hello, the Lawnet would like to answer as follows:

1. List of goods and services subject to 5% VAT in Vietnam

According to Article 10 of Circular 219/2013/TT-BTC (amended by Circular 26/2015/TT-BTC), the following goods and services are subject to 5% VAT:

(1) Clean water serving manufacture and everyday life, except for bottled water and other soft drinks subject to 10% tax.

(2) Ores used for fertilizer manufacture; pesticides and growth stimulants for plants and animals, including:

- Ores used for manufacture of fertilizers such as apatite ore used for manufacture of phosphate fertilizers, humus used as biofertilizers;

- Pesticides include plant protection drugs on the List of plant protection drugs issued by those in the List of pesticides complied by the Ministry of Agriculture and Rural Development and other pesticides;

- Growth stimulants for plants and animals.

(3) Dredging channels, canals, ponds, and lakes serving agriculture; plant cultivation; preprocessing and preservation of agricultural products (except for dredging in-field trenches mentioned in Clause 3 Article 4 of Circular 219/2013/TT-BTC).

Preprocessing and preservation of agricultural products include drying, husking, threshing, cutting, grinding, putting into cold storage, salting, and other usual means of preservation mentioned in Clause 1 Article 4 of Circular 219/2013/TT-BTC.

(4) The farming, breeding, aquaculture products that are unprocessed or preprocessed (defined in Clause 1 Article 4 of Circular 219/2013/TT-BTC), except for the cases in Clause 5 Article 5 of Circular 219/2013/TT-BTC.

The unprocessed farming products mentioned in this Clause include unhusked rice, husked rice, corn, potatoes, cassava, and wheat.

(5) Latex and resin that have undergone insufficient processing; fishing nets and fibers for making fishing nets regardless of materials.

(6) Fresh foods for business, unprocessed forestry products for business, except for wood, bamboo sprouts, and the products enumerated in Clause 1 Article 4 of Circular 219/2013/TT-BTC.

Fresh foods include the foods that have not been cooked or processed into other products, or have only been cleaned, unhusked, cut, frozen, or dried in a way that they are still fresh foods such as meat of livestock and poultry, shrimps, crabs, fish, and other aquaculture products. 10% tax shall be levied on seasoned foods.

Unprocessed forestry products include the products from natural forests such as rattan, bamboo, mushrooms, roots, leaves, flowers, herbs, resin, and other forestry products.

Example 49: Company A produces seasoned triggerfish under the following procedure: fresh triggerfish are caught and filleted, then seasoned with sugar, salt, solpitol, then packaged and frozen. The seasoned triggerfish is subject to 10% VAT.

(7) Sugar; by-products during the sugar manufacture process including molasses, bagasse.

(8) Products made of jute, rattan, bamboo, leaves, straws, coconut shells, hyacinth, and other handicrafts made of recycled materials from agriculture; preprocessed cotton; newspaper printing paper.

(9)Medical equipment includes machinery and instruments serving healthcare such as: radiographic equipment serving medical examination and treatment, equipment and instruments for surgery and injury treatment; ambulances; instruments for blood pressure measurement, cardiography, blood infusion, syringes; birth control equipment, and other medical equipment certified by the Ministry of Health.

Cotton wool, bandages, gauze pads, and medical tampons; medicines including finished medicines and raw materials, except for functional foods; vaccines; bioproducts, distilled water to mix with injectable medicines or intravenous fluids; caps, clothing, facemasks, gloves, boots, medical towels, breast implants and skin fillers (not including cosmetics); chemicals used for testing and sterilization.

(10) Teaching aids include models, pictures, boards, chalks, rulers, compasses, other equipment and instruments for teaching, research, and scientific experimentation.

(11) Artistic activities, exhibitions, sports; art performances; cinematography; importing, distributing, and showing films.

- Revenues from activities, exhibitions, sports do not include the revenues from goods sale, lease on yards or exhibition booths.

- Art performances and art performance organization services must be licensed by competent authorities.

- Cinematography; importing, distributing, and showing films

(12) Children’s toys; books other than those that are not subject to VAT mentioned in Clause 15 Article 4 of Circular 219/2013/TT-BTC.

(13) Scientific and technological services, which mean the activities that serve or assist in scientific research and technology development; the activities related to intellectual property; transfer of technologies, technical regulations and standards related to measurement, product quality, goods, nuclear and radiation safety, and atomic energy; consultancy, training, dissemination, and application of scientific and technological achievements to socio-economic fields under contracts for scientific and technological services defined in the Law on Science and technology, not including online games and Internet-based entertainments.

(14) Sale, lease, and lease-option of social housing according to the Law on Housing. Social housing means the housing invested by the state or the organizations and individuals from various economic sectors, which satisfy the criteria for housing in terms of selling prices, rents, and eligible buyers according to housing laws.

2. List of goods and services subject to 10% VAT in Vietnam

According to Article 11 of Circular 219/2013/TT-BTC, 10% tax shall be levied on the goods and services that are not mentioned in Article 4, Article 9 and Article 10 of Circular 219/2013/TT-BTC.

The rates of VAT mentioned in Article 10 and Article 11 of Circular 219/2013/TT-BTCshall be uniformly applied to the each type of goods and services, whether they are imported, manufactured, processed, or traded.

Example 50: 10% tax is levied on apparel. That means the tax rate is always 10% whether such apparel is imported manufactured, processed, or traded.

VAT on the products made of recycled wastes and scrap is the same as VAT on the wastes and scrap when they are sold.

If a taxpayer sells various goods and services that are subject to various rates of VAT, they must be sorted by VAT rates. Otherwise, the highest rate of VAT among which shall apply.

If the rate of VAT in the preferential import tariff schedule is found not conformable with this Circular, this Circular shall apply. If different rates of VAT are applied to the same kind of goods that are imported or manufactured in Vietnam, the local tax authority and customs authority must send a report to the Ministry of Finance for guidance.

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Key word: VAT | goods and services | 5% VAT | 10% VAT | in Vietnam |

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