Law No. 48/2024/QH15 dated November 26, 2024 on Value-added Tax

NATIONAL ASSEMBLY --------	SOCIALIST REPUBLIC OF VIETNAM Independence - Freedom - Happiness ---------------
Law No. 48/2024/QH15	Hanoi, November 26, 2024

LAW
VALUE-ADDED TAX

Based on the Constitution of the Socialist Republic of Vietnam;
The National Assembly promulgates the Value-Added Tax Law.

Chapter I

GENERAL PROVISIONS

Article 1. Scope of regulation

This law regulates taxable entities, tax-exempt entities, taxpayers, the basis and methods for calculating value-added tax (VAT), VAT deduction, and VAT refund.

Article 2. Value-added tax

Value-added tax is the tax calculated on the added value of goods and services arising from the process of production, circulation, and consumption.

Article 3. Taxable entities

Goods and services used for production, business, and consumption in Vietnam are subject to value-added tax, except for the entities specified in Article 5 of this Law.

Article 4. Taxpayers

1. Organizations, households, and individuals producing or trading goods and services subject to value-added tax (hereinafter referred to as business establishments).

2. Organizations and individuals importing goods subject to value-added tax (hereinafter referred to as importers).

3. Organizations and individuals producing and trading in Vietnam who purchase services (including cases of purchasing services associated with goods) from foreign organizations without a permanent establishment in Vietnam, foreign individuals who are non-residents of Vietnam, except in cases specified in clauses 4 and 5 of this Article; organizations producing and trading in Vietnam purchasing goods and services for the purpose of oil and gas exploration, development, and extraction activities from foreign organizations without a permanent establishment in Vietnam, foreign individuals who are non-residents of Vietnam.

4. Foreign suppliers without a permanent establishment in Vietnam conducting e-commerce and digital platform-based business activities with organizations and individuals in Vietnam (hereinafter referred to as foreign suppliers); organizations managing foreign digital platforms that withhold and remit taxes on behalf of foreign suppliers; businesses in Vietnam applying the VAT calculation method by deducting VAT on services purchased from foreign suppliers without a permanent establishment in Vietnam through e-commerce channels or digital platforms that withhold and remit taxes on behalf of foreign suppliers.

5. Organizations managing e-commerce platforms, digital platforms with payment functions that withhold, remit taxes on behalf of, and declare taxes deducted for businesses and individual traders on e-commerce platforms and digital platforms.

6. The government specifies in detail clauses 1, 4, and 5 of this Article; regulations on taxpayers in cases where foreign suppliers provide services to business entities in Vietnam that apply the VAT deduction method specified in clause 4 of this Article.

Article 5. Non-taxable entities

1. Products from crops, planted forests, livestock, aquaculture, and fishing that are not processed into other products or only undergo normal processing by organizations or individuals self-producing or catching and selling them, including in the import stage.

2. Breeding animal products according to the law on livestock, plant breeding materials according to the law on cultivation.

3. Animal feed according to the law on livestock; aquaculture feed according to the law on fisheries.

4. Salt products produced from seawater, natural rock salt, refined salt, and iodized salt with the main component being sodium chloride (NaCl).

5. Public housing sold by the state to those currently renting.

6. Irrigation, drainage, plowing, and land cultivation; dredging canals and ditches for agricultural production; agricultural product harvesting services.

7. Land use rights transfer.

8. Life insurance, health insurance, student insurance, and other human-related insurance services; livestock insurance, crop insurance, other agricultural insurance services; insurance for ships, boats, equipment, and other necessary tools directly serving fishing activities; reinsurance; insurance for oil and gas facilities, foreign-flagged oil tankers hired by foreign contractors or subcontractors for operation in Vietnamese waters or overlapping maritime zones agreed upon by Vietnam and neighboring countries.

9. Financial, banking, securities trading, and commercial services, including:

a) Credit services as prescribed by the law on credit institutions and specific fees as stated in the loan agreement between the Vietnamese Government and foreign lenders;

b) Loan services by taxpayers who are not credit institutions;

c) Securities trading, including securities brokerage, proprietary trading, securities underwriting, securities investment consulting, securities fund management, securities portfolio management as prescribed by the law on securities;

d) Capital transfer, including the transfer of part or all of the invested capital in another economic organization (whether or not a new legal entity is established), securities transfer, equity transfer, and other forms of capital transfer as prescribed by law, including the sale of a business to another business for production and business activities, with the acquiring business inheriting the rights and obligations of the selling business according to the law. This does not include transferring investment projects, selling assets;

e) Debt sales including accounts receivable and payable;

f) Foreign exchange trading;

g) Derivatives as prescribed by the law on credit institutions, securities law, and commercial law, including: interest rate swaps; forward contracts; futures contracts; options contracts, and other derivatives;

h) The sale of collateralized assets by organizations wholly owned by the State, established by the government to buy and sell bad debts of Vietnamese credit institutions.

10. Health and veterinary services:

a) Healthcare services include medical consultations, treatments, disease prevention for people, family planning services, health rehabilitation, and recovery services for patients; care services for the elderly and disabled; patient transportation, and renting rooms and beds in healthcare facilities; testing, radiography; blood and blood products for patients.

Care services for the elderly and disabled include healthcare, nutrition, and organizing cultural, sports, entertainment activities, physical therapy, and rehabilitation for the elderly and disabled.

If medication is included in a healthcare package according to the Ministry of Health’s regulations, the medication cost within the treatment package is also exempt from value-added tax;

b) Veterinary services include animal disease consultations, treatments, and prevention.

11. Funeral services.

12. Maintenance, repair, and construction activities funded by public contributions or humanitarian aid (making up at least 50% of the total project funds) for historical and cultural monuments, scenic spots, cultural and artistic buildings, public service facilities, and infrastructure for social policy beneficiaries.

13. Teaching and vocational training activities according to the law on education and vocational education.

14. Broadcasting and television services funded by state budget sources.

15. Publishing, importing, and distributing newspapers, magazines, newsletters, special issues, political books, textbooks, curricula, legal texts, scientific and technical books, books for foreign information services, ethnic minority language books, and propaganda materials such as posters, including in audio or video formats, electronic data; money, printed currency.

16. Public passenger transport by buses, trains, and inland waterway vehicles.

17. Machines, equipment, spare parts, and materials that are not yet produced domestically and need to be imported for direct use in scientific research and technology development activities; machinery, equipment, and spare parts for the exploration and development of oil and gas; aircraft, helicopters, gliders, oil rigs, and vessels not yet produced domestically and imported as fixed assets for businesses or leased from abroad for production, business, or leasing purposes.

18. Products for national defense and security as specified by the Minister of Defense and Minister of Public Security; products and services imported for national defense and security industries according to the list issued by the Prime Minister.

19. Goods imported under humanitarian aid, non-refundable aid; goods and services sold to foreign organizations and individuals, international organizations for humanitarian aid to Vietnam.

20. Goods transshipped, in transit through Vietnam; goods temporarily imported for re-export; temporarily exported goods for re-import; imported materials for the production and processing of export goods under export contracts; goods and services bought and sold between foreign countries and free trade zones, and between free trade zones.

Imported goods from foreign countries by leasing companies directly entering free trade zones for leasing to enterprises within those zones.

21. Technology transfer as prescribed by the Technology Transfer Law; intellectual property rights transfer as prescribed by the Intellectual Property Law; software products and software services as prescribed by the law.

22. Gold in bars or ingots not yet processed into artistic products, jewelry, or other products at the import stage.

23. Export products consisting of unprocessed natural resources and minerals, or processed products made from natural resources and minerals as specified by the government.

24. Artificial products used as replacements for body parts for patients, including long-term implantable body parts; crutches, wheelchairs, and other specialized tools for the disabled.

25. Goods and services by businesses with annual turnover up to 200 million VND; property sold by non-taxable entities; national reserve goods sold by reserve agencies; fees and charges as prescribed by the law on fees and charges.

26. Goods imported under the following conditions:

a) Gifts for state agencies, political organizations, social-political organizations, professional social organizations, armed units under import duty exemptions according to the law on export and import duties;

b) Gifts under import duty exemptions from foreign organizations to individuals in Vietnam; belongings of foreign organizations or individuals under diplomatic privileges, and personal property moved under import duty exemptions;

c) Goods within the personal baggage exemption standards according to the law on export and import duties;

d) Goods imported as donations for disaster relief, disease control, and war recovery according to government regulations;

e) Border trade goods according to regulations;

f) Relics, antiques, national treasures under cultural heritage law.

27. Business establishments selling goods and services not subject to VAT as prescribed in this Article are not allowed to deduct or refund input VAT, except in cases where a 0% VAT rate is applied according to Article 9, clause 1 of this Law.

28. The government specifies this Article in detail. The Minister of Finance will issue regulations on the documentation and procedures for determining VAT-exempt entities as prescribed in this Article.

1. The 0% tax rate applies to the following goods and services:

a) Exported goods, including: goods sold from Vietnam to organizations or individuals abroad and consumed outside of Vietnam; goods sold from domestic Vietnam to organizations in the non-taxable zone and consumed within the zone to directly support export production activities; goods sold at the isolated zone to individuals (foreigners or Vietnamese) who have completed exit procedures; goods sold at duty-free shops;

b) Exported services, including: services provided directly to organizations or individuals abroad and consumed outside of Vietnam; services provided directly to organizations in the non-taxable zone and consumed within the zone to directly support export production activities;

c) Other exported goods and services, including: international transport; leasing transport vehicles used outside the territory of Vietnam; air transport and maritime services provided directly or through agents for international transport; construction and installation activities abroad or in the non-taxable zone; digital content products provided to foreign parties with evidence proving consumption outside of Vietnam as per government regulations; spare parts and materials for repair, maintenance of equipment, machinery, and vehicles for foreign parties and consumed outside of Vietnam; goods processed for export as per legal regulations; other goods and services exempt from VAT when exported, except for cases not subject to the 0% tax rate as specified in clause d of this section;

d) Cases not applying the 0% tax rate include: technology transfer, intellectual property rights transfer abroad; reinsurance services abroad; credit services; capital transfer; derivative products; postal and telecommunications services; exported products specified in Clause 23, Article 5 of this Law; imported and then exported tobacco, alcohol, beer; gasoline and oil bought domestically sold to business establishments in the non-taxable zone; cars sold to organizations or individuals in the non-taxable zone.

2. The 5% tax rate applies to the following goods and services:

a) Clean water used for production and consumption, excluding bottled, canned drinking water, and other beverages;

b) Fertilizers, ores for fertilizer production, pesticides, and animal growth stimulants as regulated by law;

c) Excavation, dredging services for canals, ditches, ponds, and lakes serving agricultural production; planting, care, and pest control for crops; preliminary processing and preservation of agricultural products;

d) Agricultural products, forest products (except wood and bamboo shoots), livestock, aquaculture products, fishing catches not yet processed into other products or only processed through simple methods, except for products specified in Clause 1, Article 5 of this Law;

e) Rubber in the forms of latex, sheet, and crumb; nets, ropes, and threads for fishing nets;

f) Products made from hemp, sedge, bamboo, rattan, leaves, straw, coconut husks, water hyacinths, and other craft products made from agricultural raw materials; cotton fiber after rough combing and fine combing; newsprint;

g) Fishing vessels in coastal waters; machinery, equipment specialized for agricultural production as regulated by the government;

h) Medical equipment as regulated by the law on medical devices; medicines for disease prevention and treatment; pharmaceutical materials for producing medicinal drugs;

i) Teaching and learning devices, including models, pictures, blackboards, chalk, rulers, compasses;

k) Traditional and folk performance arts;

l) Toys for children; books of all kinds, except books specified in Clause 15, Article 5 of this Law;

m) Scientific and technological services as regulated by the Law on Science and Technology;

n) Sale, lease, and lease-purchase of social housing as regulated by the Law on Housing.

3. The 10% tax rate applies to goods and services not specified in Clause 1 and Clause 2 of this Article, including services provided by foreign suppliers without a permanent establishment in Vietnam to organizations or individuals in Vietnam through electronic commerce platforms or digital platforms.

4. Business establishments with multiple types of goods and services that have different VAT rates (including exempt goods and services) must declare VAT according to each specified tax rate for each type of goods and services. If the business establishment cannot separate the goods and services by tax rate, they must calculate and pay tax at the highest applicable rate for the goods and services being produced or sold.

5. Agricultural products, forest products, livestock, aquaculture products, fishing catches, and others that have not been processed or only minimally processed, and are used as animal feed or medicinal materials, will apply the VAT rate according to the rate for agricultural products, forest products, livestock, and aquaculture.

By-products, waste, and scrap that are recovered for recycling or reuse, when sold, will be taxed according to the rate for scrap, by-products, and waste.

6. The government provides detailed regulations for Clause 1 and Clause 2 of this Article. The Minister of Finance specifies the procedures for applying the 0% VAT rate mentioned in Clause 1 of this Article.

Article 10. Tax calculation methods

The VAT calculation methods include the credit method and the direct method.

Article 11. Credit method

1. The VAT to be paid under the credit method is determined as the output VAT minus the input VAT that can be credited.

a) The output VAT is the total VAT on goods and services sold, as shown on the VAT invoice.

b) The input VAT is the total VAT shown on the VAT invoices for the purchase of goods and services, as well as VAT payment documents for imported goods or services as regulated by the law.

2. The credit method applies to business establishments that fully comply with accounting, invoicing, and documentation regulations as per the law on accounting, invoices, and documents.

3. The government specifies further details on this Article.

Article 12. Direct method

1. The VAT to be paid under the direct method is calculated based on the added value, multiplied by the VAT rate applicable to the buying, selling, and processing of gold, silver, and precious stones.

The added value of buying, selling, and processing gold, silver, and precious stones is determined by the sale price of gold, silver, and precious stones minus the purchase price of gold, silver, and precious stones.

If a business establishment engages in buying, selling, or processing gold, silver, and precious stones, it must account for this activity separately for VAT payment under the direct method.

2. The VAT to be paid under the direct method based on revenue is determined by the percentage rate multiplied by the revenue as follows:

a) The subjects subject to this include: a1) Enterprises, cooperatives, and associations with annual revenue below 1 billion VND, except for those voluntarily applying the credit method as per Clause 2, Article 11 of this Law; a2) Households, individuals engaged in production and business, except as specified in Clause 3 of this Article; a3) Foreign organizations without a permanent establishment in Vietnam, non-resident individuals who have revenue in Vietnam and have not fully implemented the accounting, invoicing, and documentation requirements.

b) The percentage rate for calculating VAT is as follows:

b1) Distribution and supply of goods: 1%; b2) Services, construction without including materials: 5%; b3) Manufacturing, transport, services attached to goods, and construction including materials: 3%; b4) Other business activities: 2%.

c) Revenue for VAT calculation is the total amount of money from selling goods and services, as indicated on the sales invoice, including any surcharges and additional fees received by the business.

3. Households and individuals that do not comply or inadequately comply with the accounting, invoicing, and documentation regulations must pay VAT according to the lump-sum tax method as per the Tax Management Law.

4. The government provides further details on Clause 1 of this Article. The Minister of Finance specifies the goods and services subject to the percentage rates in Clause 2 of this Article.

See full details here.