On 26 November 2024, the National Assembly officially passed the Value Added Tax (VAT) Law No. 48/2024/QH15. Compared to the current regulations, the 2024 VAT Law has numerous changes and some notable points are as follows:
I. Taxpayers
Supplemental provisions for taxpayers:
Include foreign suppliers without a permanent establishment in Vietnam engaging in e-commerce or business activities on digital platforms, and foreign platform operators who withhold and pay taxes on behalf of foreign suppliers.
Platform operators managing e-commerce trading floors or platforms shall withhold and pay taxes on behalf of individual business households operating on such e-commerce platforms and digital platforms.
II. Non-taxable objects
2.1 Adjustments to entities not subject to VAT
Certain entities previously exempt from VAT under current regulations are removed, including:
Fertilizers; specialized machinery and equipment for agricultural production; offshore fishing vessels;
Securities custody; market organizing services of stock exchanges or securities trading centers; other securities trading activities.
Modifications or additions to guidance for certain goods and services exempt from VAT aim to reduce difficulties for businesses and administrative procedures, such as:
Removing the provision that requires the combined value of natural resources, minerals, and energy costs to account for 51% or more of the product cost for exported goods to qualify for VAT rates and refunds, replacing it with a Government-issued list of processed exported products from extracted resources and minerals that are either restricted or discouraged for export;
Replacing the term "computer software" with "software products and software services as prescribed by law";
Excluding "capital transfers" from covering the transfer of investment projects or the sale of assets.
2.2 Raising the revenue threshold for VAT liability for business households and individuals
Article 25 of the 2024 VAT Law stipulates that goods and services produced or traded by households and individuals with an annual revenue of up to VND 200 million are exempt from VAT. This provision takes effect from 01 January 2026.
Currently, under Circular 40/2021/TT-BTC guiding the 2008 VAT Law, business households and individuals with annual revenue of VND 100 million or more from production and business activities are subject to VAT.
Thus, the VAT Law raises the revenue threshold for VAT liability for business households and individuals from VND 100 million to VND 200 million. From 01 January 2026, only households and individuals with annual revenue of VND 200 million or more will be required to pay VAT.
III. Taxable price
3.1 Amendment to the regulations on taxable price for imported goods
Law on VAT 2024 stipulates taxable price for imported goods as follows:
“For imported goods, the taxable price is the taxable value for import duty as prescribed by Law on Export and Import duties plus import duties (if any) plus additional import dutied as prescribed (if any), plus special excise tax (if any) and plus environmental protection tax (if any).”
Compared to Law on VAT 2008, Law on VAT 2024 has codified the determination of import duties and environmental protection tax to be included in the tax price of imported goods (if any). Previously, these aspects were only guided in decrees and circulars.
3.2 Supplement to the tax price of goods and services used for sales promotion
Law on VAT 2024 stipulates taxable prices of goods and services used for sales promotion in accordance with trade laws are zero (0).
Previously, this aspect was only guided in decrees and circulars.
IV. Amendment to tax rates for certain goods and services
4.1 Supplement to subjects applying the 0% tax rate
International transportation;
Construction, installation works abroad, in non-tax zones;
Goods sold in quarantine areas for individuals (foreigners or Vietnamese) who have completed exit procedures; goods sold at duty-free shops;
Export services including: Leasing services of means of transport used outside the territory of Vietnam; Services of the aviation, maritime industries provided directly or through agents for international transportation.
4.2 Regulations on products currently exempt from tax, which will be subject to a 5% tax rate
Fertilizers;
Fishing vessels operating in coastal waters.
4.3 Regulations on products currently subject to a 5% tax rate, which will be subject to a 10% tax rate
Unprocessed forest products;
Sugar; by-products in sugar production, including molasses, bagasse, and mud residue;
Specialized equipment and tools for teaching, research, and scientific experiments;
Cultural, exhibition, sports, and physical activities; performing arts; film production; film import, distribution, and screening.
V. Tax Deduction and Refund
5.1 Amendment to VAT input tax deduction conditions not previously stipulated
Purchase of goods and services under 20 million VND must have non-cash payment vouchers:
Previously, according to Clause 2, Article 12 of the Law on VAT 2008, goods and services purchased each time with a value under twenty million VND did not require non-cash payment vouchers for VAT deduction.
However, according to point b, Clause 2, Article 14 of the Law on VAT 2024 , all purchased goods and services must have non-cash payment vouchers, except for special cases as prescribed by the Government.
Additional deductible input VAT supporting documents
According to point c, clause 2, Article 14 of the Law on VAT 2024, enterprises are allowed to deduct input VAT for exported goods and services if there is a packing slip, bill of lading, and cargo insurance certificate; except for special cases as prescribed by the Government.
5.2. Supplement to cases for tax refunds
Clause 3, Article 15 of the Law on VAT 2024 adds the following case for tax refunds:
“Businesses that only produce goods and provide services subject to a 5% VAT rate, if the amount of input VAT that has not been fully deducted is VND 300 million or more after 12 consecutive months or 4 consecutive quarters, are entitled to a VAT refund; in case businesses produce goods and provide services subject to multiple VAT rates, the refund is calculated based on the allocation ratio prescribed by the Government.”
The Law of Value added tax No. 48/2024/QH15 takes effect from 01 July 2025.
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