What goods and services are expected to be subject to a VAT rate of 5% in Vietnam?

What goods and services are expected to be subject to a VAT rate of 5% in Vietnam?

The Ministry of Finance is seeking opinions on the draft Law on Value Added Tax (amended) to address inconsistencies and overlaps in the VAT legal system.

Clause 2 Article 9 of the draft Law on Value Added Tax (amended) proposes that goods and services subject to a VAT rate of 5% include:

- Clean water for production and living, excluding bottled water, bottled water, and other soft drinks.

- Fertilizers; ores for fertilizer production; pesticides, including pesticides and growth stimulants for livestock and crops.

- Services for digging, dredging, cleaning canals, ditches, and ponds for agricultural production; planting, caring for, and preventing pests for crops; processing and preserving agricultural products.

- Unprocessed agricultural, forest, livestock, and fishery products, except for products specified in Clause 1, Article 5 of the Draft.

- Rubber hats in the form of crepe rubber, sheet rubber, bun rubber, and bean rubber; nets, ropes, and fibers for weaving fishing nets.

- Products made from jute, cane, bamboo, rattan, leaves, straw, coconut shell, coconut shell, water hyacinth, and other handicrafts made from agricultural waste materials; cotton fibers that have been coarsely or finely brushed; newsprint.

- Fishing boats in the deep sea and ocean; tractors; plows; threshers; row-cutting machines; roots-covering machines; land leveling equipment; seed sowing machines; transplanting machines; sugarcane planting machines; matting machine system; tilling, hilling machines, spreading, sprinkling fertilizer, fertilizing machines; pesticide spraying machines; rice harvesting machines, corn, sugarcane, coffee, cotton harvesting machines; tuber, fruit, and root harvesting machines; tea cutting machines, tea picking machines; rice threshing machines;

Corn cob peeling and shelling machines; corn shelling machines; soybean threshers; peanut shellers; coffee husking; coffee processing equipment, wet rice; drying machines for agricultural products (rice, corn, coffee, pepper, cashew nuts, etc.), aquatic products; machines for collecting, loading sugarcane, rice, and straw in the field; poultry hatching and hatching machines; grass harvesting machines, baling machines for straw and grass; milking machines and specialized machinery and equipment for agricultural production as prescribed by the Government.

- Medical equipment, machinery, and instruments as prescribed by the law on medical equipment management; cotton, sanitary pads; preventive and curative medicines; chemical products, medicinal herbs are raw materials for the production of medicines for the prevention and treatment of diseases.

- Teaching and learning aids, including models, drawings, boards, chalk, rulers, compasses.

- Toys for children; books of all kinds, except books specified in Clause 15, Article 5 of the Draft.

- Scientific and technological services as prescribed by the Law on Science and Technology in 2013.

- Sale, lease, and lease purchase of social housing as prescribed by the Law on Housing in 2014.

What goods and services are expected to be subject to a VAT rate of 5% in Vietnam? - image from internet

Which goods are currently subject to a VAT rate of 5% in Vietnam?

According to Clause 2 Article 8 of the Law on Value Added Tax in 2008 (supplemented by Clause 3, Article 1 of the Law on Amendments to the Value Added Tax in 2013 and Clause 2 and Clause 3, Article 3 of the Law on Amendments to Tax Laws in 2014), the tax rate of 5% applies to goods and services as follows:

- Clean water for production and living;

- Ores for fertilizer production; pesticides and growth stimulants for livestock and crops;

- Services for digging, dredging, cleaning canals, ditches, and ponds for agricultural production; planting, caring for, and preventing pests for crops; processing and preserving agricultural products;

- Unprocessed agricultural, livestock, and fishery products, except for products specified in Clause 1, Article 5 of this Law;

- Unprocessed rubber latex; unprocessed pine resin; nets, ropes, and fibers for weaving fishing nets;

- Fresh food; unprocessed timber products, except for wood, bamboo shoots, and products specified in Clause 1, Article 5 of the Law on Value Added Tax in 2008;

- Sugar; by-products in sugar production, including sugar dregs, sugarcane bagasse, and mud;

- Products made from jute, cane, bamboo, rattan, leaves, straw, coconut shell, coconut shell, water hyacinth, and other handicrafts made from agricultural waste materials; unprocessed cotton; newsprint;

- Medical equipment and instruments, cotton, sanitary pads; preventive and curative medicines; chemical products, medicinal herbs are raw materials for the production of medicines for the prevention and treatment of diseases;

- Teaching and learning aids, including models, drawings, boards, chalk, rulers, compasses, and specialized equipment and tools for teaching, research, and scientific experiments;

- Cultural activities, exhibitions, sports; artistic performances, film production; import, distribution, and screening of films;

- Toys for children; books of all kinds, except books specified in Clause 15, Article 5 of the Law on Value Added Tax in 2008;

- Scientific and technological services as prescribed by the Law on Science and Technology in 2013.

- Sale, lease, and lease purchase of social housing as prescribed by the Law on Housing in 2014.

Which goods and services are currently subject to a VAT rate of 10% in Vietnam?

Under Clause 3, Article 8 of the Law on Value Added Tax in 2008, the following regulations are stipulated:

Tax rates

...

3. The tax rate of 10% applies to goods and services not specified in Clause 1 and Clause 2 of this Article.

Therefore, the VAT tax rate of 10% applies to goods and services that do not apply the tax rates of 0% and 5%.

Note: The draft Law on Value Added Tax (amended) is currently under consultation and has not yet come into effect.

Best regards!