Hi Lawnet. May I ask which goods and services are not subject to value added tax in Vietnam? – Minh Ky (Dong Thap, Vietnam)
Article table of contents
Vietnam: 26 objects not subject to value added tax in 2022 (Source: internet)
1. What is Value Added Tax?
According to Article 2 of Vietnam's Law on Value Added Tax 2008, value-added tax is a tax imposed on the added value of goods or services arising in the process from production, circulation to consumption.
2. 26 objects not subject to value added tax in 2022
26 objects not subject to value added tax include:
(1) 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.
(2) Products which are animal breeds and plant varieties, including breeding eggs, breeding animals, seedlings, seeds, sperms, embryos and genetic materials.
(3) Irrigation and drainage; soil ploughing and harrowing; dredging of intra-field canals and ditches for agricultural production; services of harvesting farm produce.
(4) Fertilizers; specialized machinery and equipment for agricultural production; offshore fishing vessels; fodder, poultry and other pet food.
(5) Salt products made of seawater, natural rock salt, refined salt, iodized salt of which the primary constituent is sodium chloride (NaCl).
(6) State-owned residential houses sold by the State to current tenants.
(7) Transfer of land use rights;
(8) Life insurance, health insurance, insurance for students, other insurances related to humans, insurance for animals, insurance for plants, other agricultural insurances; insurance for boats, ships, and other equipment necessary for fisheries; reinsurance.
(9) The financial, banking, and securities services below:
- Credit services include: loaning, discounting or rediscounting negotiable instruments and other valuable papers; guarantee; finance lease; domestic factoring; international factoring; other credit services according to law;
- Loaning services provided by taxpayers that are not credit institutions;
- Securities services include: securities brokerage; proprietary trading of securities; guaranteeing securities issuance; securities investment consultancy; securities depository; management of securities investment fund; management of securities investment portfolio; market organization services of Stock Exchanges or Securities trading centers; other securities services according to the laws on securities;
- Capital transfers include: transferring part or the whole invested capital, including selling an enterprise to another enterprise; other forms of capital transfers according to law.
- Selling debts;
- Trading in foreign currencies;
- Derivative financial services include: swapping interest rates; forward contracts, futures contracts, foreign-exchange options; other derivative financial services according to law;
- Selling collateral for loans taken by organizations of which 100% of charter capital is possessed by the State, which are established by the Government to settle bad debts of Vietnamese credit institutions.
(10) Health services, veterinary medicine services including medical examination and treatment services for human and animals; care services for elderly people and disabled people.
(11) Public post and telecommunications and universal Internet services under the Governments programs.
(12) Maintenance of zoos, parks, urban trees, public lighting; funeral services.
(13) 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.
(14) Teaching and vocational training as provided for by law.
(15) State budget-funded radio and television broadcasting.
(16) Publishing, importing, issuing newspapers, magazines, academic journals, political books, text books, law books, science – technology books, books in ethnic languages, printing propagating pictures and banners, including audio, video tapes, discs, or computer files; money, money printing.
(17) Mass transit by bus and tramcar.
(18) Machinery, equipment, parts, and materials that cannot be produced at home and need to be imported to serve scientific research, technological development; machinery, equipment, parts, specialized vehicles, and materials that cannot be produced at home and need to be imported to serve petroleum exploration; airplanes, oil rigs, and ships that cannot be produced at home and must be imported to form fixed assets, or need to be hired from foreign partners to serve production, business, or to lease back.
(19) Special-purpose weapons and military equipment for security and defense purposes.
(20) 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.
(21) 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.
(22) Technology transfer under the Law on Technology Transfer; transfer of intellectual property rights under the Law on Intellectual Property; computer software.
(23) Gold imported in the form of bars or ingots which have not yet been processed into fine-art articles, jewelries or other products.
(24) 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.
(25) Artificial products used for the substitution of diseased peoples organs; crutches, wheelchairs and other tools used exclusively for the disabled.
(26) Goods and services provided by business households and individuals that earn annual revenue of less than 100 million VND.
(Article 5 of Vietnam's Law on Value Added Tax 2008, amended in 2013, 2014, 2016)
Diem My
