Vietnam
Hanoi
EY
Corner Stone Building
8th Floor
16 Phan Chu Trinh Street
Hoan Kiem District
Hanoi
Vietnam
Indirect tax contacts
Huong Nguyen
Trang Pham
Ho Chi Minh City
EY
Bitexco Financial Tower 20th Floor
2 Hai Trieu Street
District 1
Ho Chi Minh City
Vietnam
Indirect tax contacts
Robert M. King
Thinh Xuan Than
Anh Tuan Thach
A. At a glance
Name of the tax
+84 (24) 3211-6144
huong.nguyen@vn.ey.com
+84 (24) 3211-6665
trang.pham@vn.ey.com
+84 (28) 3629-7744
robert.m.king@vn.ey.com
+84 (28) 3629-7775
thinh.xuan.than@vn.ey.com
+84 (28) 3629-7366
anh.tuan.thach@vn.ey.com
Value-added tax (VAT)
Local name Thue Gia tri gia tang (GTGT)
Date introduced 1 January 1999
Trading bloc membership Association of Southeast Asian Nations (ASEAN)
Administered by Ministry of Finance (http://www.mof.gov.vn)
VAT rates
Standard 10%, 8% (a temporarily reduced VAT rate applied for most of the goods subject to 10% – this is a temporary policy effective until 30 June 2025)
Reduced 5%
Other
Zero-rated (0%) and exempt
VAT number format Tax ID number – 9999999999 (10 digits)
VAT return periods
Monthly or quarterly
Thresholds
Registration None
Recovery of VAT by non-established businesses Yes, subject to certain conditions
B. Scope of the tax
VAT applies to goods and services used for production, business and consumption in Vietnam, including goods and services purchased from foreign suppliers, except for those specifically identified as not subject to VAT.
VAT on imported goods is payable by the importer within the same time limit for declaring and paying import duty.
Effective use and enjoyment. To avoid instances of non-taxation or double taxation, jurisdictions can apply “use and enjoyment” rules that allow a service that is “used and enjoyed” in the jurisdiction to be taxed or prevent a service that is “used and enjoyed” outside the jurisdiction from being taxed. If a service is taxed in the jurisdiction under the “use and enjoyment” provisions, a non-established supplier of the service may be required to register for VAT in every jurisdiction where it has customers that are not taxable persons. In Vietnam, no services are subject to the “use and enjoyment” provisions.
Transfer of a going concern. Normally the sale of the assets of a VAT-registered or VATregistrable business will be subject to VAT at the appropriate rate. However, a transfer of a business as a going concern (TOGC) may be outside the scope of the tax under certain conditions. A TOGC is the sale of a business or part of a business capable of separate operation including assets. Where the sale meets the conditions, the supply is treated as outside the scope of VAT. In Vietnam, a TOGC is treated as outside the scope of VAT where the certain conditions are met. When transferring assets upon division, separation, consolidation, merger, or transformation of an enterprise, the enterprise is not required to issue an invoice as well as declare and pay VAT, provided that the enterprise having the transferred assets must have an asset-transfer order, enclosed with a set of documents on the origin of assets. In addition, the transfer of an investment project to produce VAT taxable goods or services in accordance with the Law on Investment is not subject to VAT.
Transactions between related parties. In Vietnam, under the general rules, the value for VAT purposes for transactions between related parties must be based on the market price, except for where fixed assets are in use. Specifically when such assets are depreciated when transferring at the carrying value between an enterprise and its 100%-owned units or between its 100%-owned units to serve the production and business of goods and services subject to VAT, then such parties are not required to issue invoices as well as declare and pay VAT. Enterprises with fixed assets to be transferred must have an asset-transfer order enclosed with a set of documents on the origin of assets.
C. Who is liable
Organizations and individuals that produce and trade in taxable goods and services in Vietnam or who import taxable goods and services from overseas (referred to in this chapter as “businesses”) are liable to pay VAT. Businesses for these purposes include the following:
• Business organizations with business registrations issued under Vietnamese laws
• Economic organizations of political, social and professional organizations and units of the people’s armed forces
• Enterprises with foreign-owned capital incorporated under Vietnamese laws, foreign party to a business cooperation contract under the investment law, and foreign corporations and individuals conducting business in Vietnam that have not established a legal entity in Vietnam
considered as a transfer of ownership right in accordance with the Vietnam law on intellectual ownership rights. If the supplier is a nonresident business and does not register to declare and pay taxes in Vietnam, the customer should withhold, declare and pay VAT via the withholding tax regime. The applicable VAT rate for the payment of such activities is 5%.
For business-to-consumer (B2C) transactions, the individual customer makes payment directly to the nonresident business (e.g., by way of credit card). By regulations, there would be a FCT of 5% VAT on the payment. The withholding parties would be commercial banks/intermediary payment service providers. Nonresident business must register to declare and pay taxes directly to the tax authority.
Regulations on the import/export procedure for e-commerce goods are being developed. At the time of preparing this chapter, such regulations are at the drafting stage.
Online marketplaces and platforms. Effective 1 July 2022, foreign parties must register for VAT directly with the tax authority or authorize a representative in Vietnam to do so on their behalf. Otherwise, VAT will be withheld by Vietnamese counterparties, commercial banks or payment service providers who facilitate the offshore payment. The tax authorities’ online portal went live on 21 March 2022, and foreign suppliers are required to submit their tax registration and declarations via the portal.
Registration procedures. For newly established businesses that have completed incorporation procedures and received an incorporation license, the incorporation number shown on the license serves as the tax registration number. No separate registration procedures are required. The local business registration office/authority shall – internally – inform the local tax office where a newly established business is located. The application for new enterprise can be submitted online or by paper, including the following documents:
• Enterprise registration request form
• Enterprise charter
• List of investors/members and identification documents of individual investors, business registration certificate of organization investors
• Decision on enterprise establishment
• Investment registration certificate for foreign investors as stipulated under the Law on Investment
When a newly established business has an office, factory, branch or outlet engaging in direct sales in another province, different from the locality of the headquarters, such office, factory, branch or outlet must separately pay VAT to the local tax office where it is located, except for certain cases in which the head office can declare and pay VAT. However, there is no need to register with the local tax office of such office, factory, branch or outlet. When the headquarter sets up an office, factory, branch or outlet in another province, it shall need to update its tax registration information with a local business registration office/authority in the locality where its office, factory, branch or outlet is located. This registration office/ authority shall internally inform the local tax office the number of this newly licensed office, factory, branch or outlet, which is also the tax number.
Other businesses (e.g., foreign contractors having a permanent establishment in Vietnam) must register for tax purposes within 10 working days from the date on which contract award agreements are signed. This registration requires the regulated form (i.e., Form 04-DK-TCT), a copy of contractor license (or the equivalent issued by competent authority) and a copy of the acknowledgment/confirmation of the registration of the project office establishment (or the equivalent issued by the competent authority). Within three working days of receiving the sufficient dossier, the tax authority will issue the tax code for the taxable person.
Other than online marketplaces and platforms and newly established businesses that can register for tax registration online, other businesses should liaise with the respective local tax authorities for tax registration.
Deregistration. When the organization/individuals end their business in Vietnam, they need to proceed with the closure of the tax code after clearance of current tax liabilities (Article 14, Section 4, Circular 105/2020/TT-BTC).
Changes to VAT registration details. Upon any change to taxable person registration information (e.g., company name, address, type of business), taxable persons must notify the changes and apply for amendment of its business registration certificate (if required) to the licensing authority (i.e., Business Registration Division of local Department of Planning and Investment where the company’s headquarters is located) within 10 working days with changes to business registration information as prescribed. The local business registration office/authority shall – internally – inform the local tax office where a newly established business is located.
D. Rates
The term “taxable supplies” refers to supplies of goods and services liable to a rate of VAT, including the zero-rate.
The VAT rates are:
• Standard rate: 10%, 8% (a temporarily reduced VAT rate applied for most of the goods subject to 10% – this is a temporary policy effective until 30 June 2025)
• Reduced rate: 5%
• Zero-rate: 0%
The standard rate of VAT applies to all supplies of goods and services, unless a specific measure provides for a reduced rate, the zero-rate or an exemption.
From 1 November to 31 December 2021, taxable persons in sectors heavily affected by COVID-19, such as transportation services (e.g., transport by railways, water, air, road), lodging services, food service, etc., could obtain a 30% reduction on VAT rates (i.e., the applicable VAT rates will be reduced by a third). For example, when a taxable person issues a VAT invoice with 10% VAT, it would indicate 10%*70% on the tax rate line.
Examples of goods and services taxable at 0%
• Exported goods and services, including goods and services sold to and consumed by overseas organizations or individuals outside Vietnam, as well as goods and services supplied to and consumed by organizations or individuals in non-tariff areas
• Construction and installation carried out overseas or within export processing zones
• International transportation
Examples of goods and services taxable at 5%
• Clean water for production and daily life (except for bottled water)
• Medicine and medical equipment (except for medicine included in medical service package)
• Teaching tools
• Agricultural products
• Residential housing for sale or lease
Examples of goods and services taxable at 10%
• Telecommunications services
• Information technology services
• Financial activities, banking, securities and insurance services
• Real estate business services
• Metal production and manufacture of products from prefabricated metal
• Mining industry (excluding coal mining), production of coking coal, refined petroleum, production of chemicals and chemical products
• Goods and services subject to special consumption tax
The term “exempt supplies” refers to supplies of goods and services that are not liable to VAT and that do not qualify for input tax deduction.
Examples of exempt supplies of goods and services
• Raw agricultural products
• Livestock
• Aircraft, oil rigs and ships that are not locally produced and that are leased from overseas
• Land-use rights
• Credit activities, credit guarantees, financial leases and financial derivative services
• Capital transfers
• Securities transfers
• Life insurance services
• Health services, veterinary medicine services, including medical examination and treatment services for humans and animals
• Care services for elderly people and disabled people
• Education and vocational training
• Publication of newspapers, magazines and certain kinds of books
• Public transportation by bus and electric car
• Reinsurance services
• Technology transfers
• Public sewage services
• Foreign currency trading
• Debt transfers
• Credit card issuance
• Factoring
• Exported natural resources that are not processed or cover 51% into other products inclusive of energy cost
Option to tax for exempt supplies. Option to tax for exempt supplies is not allowed in Vietnam.
Foreign contractors. Foreign contractors that supply goods and services to Vietnam are subject to the following deemed VAT rates:
• Trading goods (separate value from service in the contract): exempt
• Services: 5%
• Construction and installation with supply of materials and equipment: 3%
• Construction and installation without supply of materials and equipment, or if supply of materials and equipment is subcontracted: 5%
• Supply of machinery and equipment with installation, training, operation and trial operation services, if the value of each activity is not calculated separately in the contract: 3%
• Transport and production: 3%
• Other business: 2%
VAT is withheld at source by the Vietnamese party to the contract unless the foreign contractor has registered for tax.
Business individuals. Business individuals who have annual income of over VND100 million are subject to the following deemed VAT rates:
• Supply of goods: 1%
• Construction (without supply of materials) and services (including leasing of assets): 5%
• Construction (with supply of materials and equipment), manufacturing, transportation: 3%
• Other business: 2%
E. Time of supply
For goods, the time of supply for VAT purposes (the tax point) is when the ownership or use rights of the goods are transferred, regardless of whether the payment is made. For services, the tax point is when the service is completely performed or when the invoice for the service is issued, regardless in both cases of whether the purchaser makes payment.
Deposits and prepayments. For deposits or advance payments that are made to ensure the execution of contracts for provision of accounting, audit, financial consulting, taxation services, valuation services, technical survey and design services, supervision consulting services, and investment construction project formulation services, the tax point is not determined at deposit payment or advance payment and no invoice issuance is required. As such, the general time of supply rules apply (as outlined above).
For all other deposits and prepayments, the tax point is when the prepayment is made, requiring an invoice to be issued.
Continuous supplies of services. There is no special time of supply rules in Vietnam for supplies of continuous supplies of services. As such, the general time of supply rules apply (as outlined above).
Goods sent on approval for sale or return. The time of supply rules for goods sent on approval for return is, in principle, the same as that for sale, i.e., when the transfer of the ownership has occurred. If goods are returned to the seller because the buyer finds that the goods are not in line with a previous agreement between the parties in respect of their quality, quantity and characteristics, etc., an adjustment invoice should be issued by the buyer or the seller that clearly states the reason for the return and the amount of VAT.
Reverse-charge services. Reverse-charge services relate to foreign contractors who apply the Foreign Contractor Tax (FCT) declaration under the deemed method. Upon making the payment, the Vietnamese purchasers must self-assess and withhold the FCT amount (including VAT and corporate income tax).
Leased assets. There is no special time of supply rules in Vietnam for supplies of leased assets. As such, the general time of supply rules apply (as outlined above).
Imported goods. For supplies of imported goods, VAT becomes due at the time of registration of the customs declarations.
Installment sales. For supplies of installment sales, VAT becomes due when the purchaser possesses the right to use the goods.
F. Recovery of VAT by taxable persons
Businesses may claim input tax paid on goods or services used for the production or trading of goods or services that are subject to VAT. Businesses recover input tax by offsetting it against output tax (VAT on sales).
To be entitled to VAT credit, a document proving payment made through a bank is required except for when the purchase value is less than VND20 million. Bank payments must be made from the bank account of the buyer(s) to the bank account of the supplier(s).
In general, a valid tax invoice must be retained to support claims for input tax credits. The tax invoice must state the pretax price, the VAT and the total amount payable.
The basis for determining the amount of deductible input tax is the amount of VAT stated on the following:
• Valid tax invoice for the goods or services
• Documentation evidencing VAT payment at the stage of importation
• Documentation evidencing VAT payment on behalf of a foreign party
If a business establishment discovers that it has not deducted an amount of VAT in its declaration because the tax invoice or receipt of the tax payment was omitted, it may make an additional declaration requesting the credit. However, any additional VAT credit declaration must be made before the tax authority announces a decision about any tax inspections carried out at the premises.
The time limit for a taxable person to reclaim input tax in Vietnam is, in principle, the period during which the input tax is incurred, whether the products are used or still in storage. If the taxable person finds that the input tax is incorrectly declared, an adjustment may be made before the tax authority, or a competent authority, announces the decision on tax inspection at the taxpayer’s premises.
Nondeductible input tax. Businesses may not claim input tax paid on goods or services used for producing or trading nontaxable goods or services. They also cannot claim the input tax of the unrelated expenses or incorrect payment method as regulations.
Examples of items for which input tax is nondeductible
• Golf expenses for employees
• House rental fees for foreign employees who have signed labor contracts with the company; in cases in which these expatriates are assigned to work in Vietnam by the foreign parent company but remain employees of the foreign parent company during their secondment period in Vietnam (i.e., they receive salaries and other benefits from the foreign parent company), and the Vietnamese entity and the foreign parent company enter into a written agreement that states that the Vietnamese entity shall bear all accommodation fees for these expatriates during their secondment period in Vietnam, input tax of these accommodation fees is creditable
• Expenses for invoices paid in cash with the value of more than VND20 million
Examples of items for which input tax is deductible (if related to a taxable business use)
• Expenses paid for raw materials, offices supplies, transportation, etc.
Partial exemption. Businesses that produce or trade taxable and nontaxable goods or services must maintain separate accounts for input tax paid on goods or services used for taxable and nontaxable goods or services. If no separate accounts are maintained, the deductible input tax is calculated using a ratio based on the proportion of taxable turnover compared with total turnover.
Approval from the tax authorities is not required to use the partial exemption standard method or special methods in Vietnam.
Capital goods. “Capital goods” are defined as tangible fixed assets such as building, machines, equipment, etc. When capital goods are purchased and relate to both taxable and exempt supplies made by a taxable person, an apportionment must be calculated to work out the percentage of the goods that relates to the taxable supplies. This percentage can only be deducted as input tax, and the remaining percentage that relates to the exempt supplies is not allowed to be deducted. There are no special rules for capital goods in respect of time and duration of use.
H. Invoicing
VAT invoices. A taxable person must provide an invoice for taxable supplies made, including exports. There are four categories of invoices:
• Invoices of exports for exporting transactions; from 1 July 2022, all exporting transactions are required to use VAT e-invoices or sales e-invoices (see the Electronic invoicing subsection below); commercial invoices can be still used for customs procedures for exportation
• VAT invoices for transactions of taxable persons applying the tax credit method
• Sales invoices for transactions of taxable persons applying the direct method or Export Processing Enterprise (EPE)
• Others, including receipts, tickets and other vouchers
The invoices can be presented in the following forms:
• Invoice printed by order: produced by a printing house by order of tax authorities for provision or sale to taxable person
• Electronic invoice: must be created, issued and processed on computers of issuer under the law on e-transactions
The tax authorities may sell only blank invoices to a few specified persons such as nonbusiness organizations, individuals and households that generate sale revenue.
A valid invoice is necessary to support a claim for input tax deduction.
Credit notes. Credit notes are not available in Vietnam. An adjustment or cancellation to a supply is reflected by way of an adjustment invoice. If it arises as a result of a return of goods, as a default principle, based on the regulations on e-invoicing, the buyer is required to issue an invoice accordingly. However, it is recommended to check on the practice with local tax authorities.
When a seller discovers that an e-invoice with a certified code from the tax authority that has not been sent to a buyer contains errors, the seller shall inform the tax authority by using a provided form for the cancellation and prepare a new e-invoice. If an e-invoice with or without a certified code from the tax authority that has been sent to the buyer is detected by either the buyer or seller to contain errors, it shall be handled as follows:
a) If the buyer’s name or address is wrong but the tax code and other information are correct, the seller shall inform the buyer of the errors and is not required to reissue the invoice. The seller shall inform the tax authority of the erroneous e-invoice by using a provided form, unless data about the erroneous e-invoice is not yet sent to the tax authority.
b) If the information about the tax code, amount, tax rate, tax amount or goods on the invoice is wrong, the seller shall (1) create an e-invoice to correct the erroneous one; or (2) issue a new e-invoice to replace the erroneous one. The seller and the buyer may agree to prepare a document specifying the errors before the seller issues a correction invoice for a new replacement invoice.
Electronic invoicing. Electronic invoicing is mandatory in Vietnam for all taxable persons.
Scope of electronic invoicing. For B2B, B2C and business-to-government (B2G) supplies, electronic invoicing is mandatory in Vietnam. There is no threshold beyond which taxable persons are required to adopt electronic invoicing in Vietnam. This is with effect from 1 July 2022.
All taxable persons must prepare to meet the information technology infrastructure requirements for e-invoicing. Some taxable persons, such as SMEs, that fail to meet the information technology requirements after 1 July 2022 can use the VAT invoices (paper-based) issued by the tax authority for a maximum 12 months, and the tax authority shall enforce gradual transition into e-invoice.
The electronic invoices can be presented in the following two forms:
• Electronic invoice with a certified code from the tax authority: an electronic invoice that is assigned an identification code by the tax authority before an organization or individual selling goods or providing services sends it to buyer
• Electronic invoice without a certified code from the tax authority: an electronic invoice that an organization selling goods or providing services sends to the buyer in the absence of a tax authority’s identification code. Subject to the approval of local tax authority, business entity shall register to use such kind of electronic invoice via the portal of General Department of Vietnam Taxation
At the time of preparing this chapter, the government is considering issuing a decree to revise some regulations in current Decree 123 on e-invoices. It is not clear, however, when the amendment decree will be issued and when it will take effect.
Simplified VAT invoices. Simplified invoices are only allowed to be issued in the following circumstances:
• An e-invoice does not necessarily have the customer’s electronic signature (including goods/services sold to overseas customers)
• E-invoices separately issued by tax authorities do not necessarily bear the digital signatures of the buyer and the seller
• E-invoices for oil/gas supplies to nontaxable persons (B2C) can omit invoice name, form number, reference number and number of the invoice; the buyer’s name, address, tax code number and electronic signature; the seller’s digital or electronic signature; and VAT rate
• Electronic documents for air transport services being considered as e-invoices issued via websites and e-commerce systems to nontaxable persons (B2C) following international practices do not necessarily bear the reference number, form number and number of the invoice, VAT rate, the customer’s tax code number and address, and the supplier’s digital signature
• Invoices for construction and installation, or construction of houses for sale under installment plans do not necessarily bear the unit, quantity and unit price
• Delivery and internal transfer note are not required to contain tax rate, tax amount and total amount payable
• Invoices for interline payment between airliners issued in accordance with regulations of the International Air Transport Association (IATA) do not necessarily have the reference number and form number of the invoice; name, address, tax code number and electronic signature of the customer, unit, quantity and unit price
• Invoices issued by an airline to its agents according to reports verified by two parties and general statements do not necessarily contain the unit price
• Invoices for construction, installation, production or provision of products/services of enterprises servicing national defense and security in accordance with the government’s regulations do not necessarily bear the unit, quantity and unit price
Self-billing. Self-billing is not allowed in Vietnam.
Proof of exports. Exports of goods and services are zero-rated. Proof of export is required. The required documents to claim a refund of input tax include contracts for the sale of goods, legitimate invoices, customs declarations for exporting goods or evidence of exporting services consumed outside of Vietnam for exporting services and proof of payment through a bank by foreign parties.
Foreign currency invoices. If an invoice is allowed to be issued in a foreign currency in accordance with regulations of the law on foreign exchange, all values on the invoice must be reported in the foreign currency without having to be converted into the domestic currency, which is the Vietnamese dong (VND). The seller must use an acceptable exchange rate on invoices.
If the local tax authority has issued the decision to settle the increase/decrease of deductible input tax, taxable persons shall adjust tax returns of the period during which the decision is received (no supplementary filing is required).
Digital tax administration. There are no transactional reporting requirements in Vietnam.
J. Penalties
Penalties for late registration. Failure to comply with registration requirements (if applicable) may result in a fine. The penalty for late registration ranges from VND1 million to VND10 million, depending on the length of the delay.
Penalties for late payment and filings. Interest is imposed for late payment of VAT at the progressive rate of 0.03% per day from 1 July 2016.
Failure to comply with tax filing requirements may result in a warning or a fine ranging from VND2 million to VND25 million, depending on the length of the delay.
Penalties for errors. The fine for understatement of tax payable or overstatement of refundable tax, exempt tax shall be 20% of the tax arrears or overstated refundable tax, exempt tax.
Late notification or failure to notify the tax authorities of changes to a taxable person’s VAT registration details may result in a warning or a fine ranging from VND500,000 to VND7 million, depending on the specific circumstance. For more details, see the subsection, Changes to VAT registration details, above.
Penalties for fraud. Tax evasion or tax avoidance if incurring may result in a fine ranging from one to three times of the tax arrears.
Personal liability for company officers. In general, company officers are not personally liable for the company’s tax violations, unless criminal intent is detected.
Statute of limitations. The statute of limitations in Vietnam is 2, 5 or 10 years. The tax authorities can go up to 10 years back to review returns and identify errors and impose a shortfall amount of tax and late payment interests. For administrative penalties, the time limit is two or five years, depending on the violation. Taxable persons that fail to apply for a tax registration shall pay all the tax arrears and late payment interest that ever arose before the day of discovering the violations.
K. New VAT law to take effect from 1 July 2025
The National Assembly of Vietnam passed the new law on valueadded tax (“the 2025 VAT law”) during their meeting session held on 26 November 2024. The 2025 VAT law takes effect on 1 July 2025, except for the application of the provision on the revenue threshold under which business households and individuals can claim VAT exemption that will take effect from 1 January 2026.
The 2025 VAT law introduces many notable points, some of which are:
In-scope taxpayers. The definition of “taxpayers” has been expanded to include the following:
• Nonresidents engaging in ecommerce activities or selling goods/services via a digital platform.
• Platform management entities or Vietnamese buyers adopting the VAT deduction method who are vested with the VAT compliance obligations on behalf of nonresident sellers/service providers.
VAT exempt goods and services. These are defined to include:
• VAT exempt capital transfers, excluding transfers of investment projects and assets
• VAT exempt debt selling, including the sale of accounts receivable and account payables
• Goods imported directly to a non-tariff zone of a finance lease company
The annual revenue threshold for business individuals to claim VAT exemption has been increased from VND100 million to VND200 million.
Input VAT associated with VAT exempt goods and services should not be creditable/refundable.
VAT rates. 0% VAT is applicable for:
• Exported goods, including those sold to overseas entities and consumed outside Vietnam; or those sold to and consumed in non-tariff zone; or goods sold at embarkation gate after individuals’ completion of embarkation; and goods sold at duty-free shops.
• Exported services, including those directly provided to overseas entities and consumed outside Vietnam; or services sold to entities in non-tariff zone and directly consumed therein for their export activities.
• Apart from international transportation, construction and installation in a non-tariff zone, and goods processed for export, 0% VAT is also applicable to other several exported goods and services, including vehicle rental for overseas use, aviation and maritime services for international transportation, digital products provided to overseas entities and consumed outside Vietnam, materials provided to overseas entities for repairing or maintenance overseas.
The 5% VAT-able goods and products are broadened to include fertilizer. However, sugar is removed from the list (which means it is subject to 10%).
The 10% VAT rate is applicable for remaining objects, including services provided by non-residents engaging in e-commerce or providing goods/services via digital platform.
Input VAT credits. Some key changes are:
• Wrongly issued invoices or omitted invoices must be declared in the month in which the error(s) arise, if the declaration of these invoices leads to an increase in the VAT payable or a reduction in the VAT refundable amount, or in the month of detection if the declaration does not result in an increase in the VAT payable or a reduction in the VAT refundable amount.
• Uncreditable input VAT can be treated as a deductible expense for corporate income tax purposes or can be added to the deductible value of fixed assets for depreciation purpose; all cases must be supported by evidence of noncash payments.
• VAT credits are applicable to assets being contributed by investors or purchases made on behalf of others.
• VAT paid on behalf of foreign entities that engage in e-commerce activities or sell goods/services via digital platform is creditable, supported by legitimate invoices and evidence of VAT payment on behalf.
• For exports, apart from contract, invoices, payment evidence and customs declaration as per the current regulations, input VAT relating to exported goods/services must be supported by a packing list, bill of lading and insurance policy, where applicable.
VAT refunds.
• The activity of importing goods and then re-exporting them to another country is not eligible for VAT refund.
• Remaining creditable input VAT associated with investment projects after offsetting against VAT payables of other activities can be refundable if it exceeds VND300 million. VAT refund claims must be submitted within one year from the completion of the investment – which is determined from the date of generating revenue. The revenue does not count toward those generated from trial production, financial income or income from scrap sales.
• For entities that produce or trade 5%, VAT goods or services can claim a VAT refund if the creditable input VAT exceeds VND300 million after consecutive 12 months or four consecutive quarters.
• VAT refunds (for buyers) is applicable only when vendors or sellers have declared and paid VAT on the relevant invoices.