Will the Value Added Tax Law 2024 in Vietnam be effective from July 01, 2025?
Will the Value Added Tax Law 2024 in Vietnam be effective from July 01, 2025?
The Value Added Tax Law 2024 was passed by the National Assembly of the Socialist Republic of Vietnam during its 15th session, 8th meeting on November 26, 2024.
The Value Added Tax Law 2024 takes effect from July 1, 2025, and stipulates the taxable objects, non-taxable objects, taxpayers, basis and methods for tax calculation, deduction, and reimbursement of value added tax.
Article 2 of the Value Added Tax Law 2024 states that value added tax is levied on the added value of goods and services arising during the process from production, circulation to consumption.
Will the Value Added Tax Law 2024 in Vietnam be effective from July 01, 2025? (Image from the Internet)
Which entities in Vietnam are subject to a 0% VAT rate from July 1, 2025?
Based on Article 9 of the Value Added Tax Law 2024, entities in Vietnam subject to a 0% VAT rate from July 1, 2025 include:
- Exported goods including:
+ Goods sold from Vietnam to organizations and individuals abroad and consumed outside Vietnam
+ Goods sold from domestic Vietnam to organizations in non-tariff zones and consumed in non-tariff zones directly serving export production activities
+ Goods sold at isolated areas to individuals (foreigners or Vietnamese) who have completed exit procedures
+ Goods sold at duty-free shops
- Export services including:
+ Services provided directly to organizations, individuals abroad and consumed outside Vietnam
+ Services provided directly to organizations in non-tariff zones and consumed in non-tariff zones directly serving export production activities
- Other exported goods and services include:
+ International transportation; services renting transport vehicles for usage outside Vietnam's territory
+ Services in the aviation and maritime sectors provided directly or via agents for international transport
+ Construction and installation work conducted abroad or in non-tariff zones
+ Digital content products provided to foreign parties with documentation proving consumption outside Vietnam as per regulations of the Government of Vietnam
+ Spare parts, supplies for maintenance and repair of vehicles, machinery, equipment for foreign parties and consumption outside Vietnam;
+ Goods processed for further export as stipulated by law; goods and services exempt from value added tax when exported
Note: Exclusion from the 0% tax rate includes:
- Transfer of technology, intellectual property rights abroad
- Reinsurance services abroad
- Lending services
- Capital transfer
- Derivatives
- Postal, telecommunications services
- Export products stipulated in Clause 23, Article 5 of this Law
- Tobacco, alcohol, beer imported and then exported
- Gasoline, oil purchased domestically and sold to enterprises in non-tariff zones
- Automobiles sold to organizations and individuals in non-tariff zones.
Who are taxpayer of value added tax in Vietnam?
Based on Article 4 of the Value Added Tax Law 2024, taxpayers include:
Article 4. Taxpayers
- Organizations, households, individuals producing, trading goods and services subject to value added tax (hereinafter referred to as business establishments).
- Organizations, individuals importing goods subject to value added tax (hereinafter referred to as importers).
- Organizations, individuals producing, trading in Vietnam that purchase services (including services associated with goods) from foreign organizations without a permanent establishment in Vietnam, individuals abroad who are non-residents in Vietnam, except as stipulated in clauses 4 and 5 of this Article; organizations producing, trading in Vietnam that purchase goods and services to conduct petroleum exploration, development, and exploitation of oil fields and gas fields of foreign organizations without a permanent establishment in Vietnam, individuals abroad who are non-residents in Vietnam.
[...]
Thus, subjects liable for value added tax include:
[1] Organizations, households, individuals producing, trading goods and services subject to value added tax
[2] Organizations, individuals importing goods subject to value added tax (hereinafter referred to as importers).
[3] Organizations, individuals producing, trading in Vietnam purchasing services (including those associated with goods) from foreign organizations without a permanent establishment in Vietnam, individuals abroad non-resident in Vietnam, except for cases [4] and [5].
Organizations producing, trading in Vietnam purchasing goods and services for conducting petroleum exploration, development, and exploitation activities of foreign organizations without a permanent establishment in Vietnam, individuals abroad non-resident in Vietnam.
[4] Foreign suppliers without a permanent establishment in Vietnam conducting e-commerce, digital platform businesses with organizations, individuals in Vietnam (hereinafter referred to as foreign suppliers);
Organizations acting as digital platform managers for foreign entities conducting tax withholdings on behalf of foreign suppliers.
Organizations doing business in Vietnam using the value added tax deduction method to purchase services from foreign suppliers without a permanent establishment in Vietnam via e-commerce channels or digital platforms conducting tax withholdings on behalf of foreign suppliers.
[5] Organizations managing e-commerce trading platforms, digital platforms with payment functions conducting tax withholdings, reporting deducted taxes for business owners, and individual businesses on e-commerce platforms, digital platforms.
