SOME NEW POINTS ON VAT (VALUE-ADDED TAX) FROM JULY 1, 2025

SOME NEW POINTS ON VAT (VALUE-ADDED TAX) FROM JULY 1, 2025

1. ENTITIES NOT REQUIRED TO DECLARE AND PAY VAT

The case of "Enterprises and cooperatives purchasing plants, cultivated forests (except timber and bamboo sprouts), husbandry, aquaculture, fishery products that have not been processed into other products or have only undergone preliminary processing by ordinary method, for sale to other enterprises or cooperatives" is moved from the category of entities not required to declare and pay VAT to the category subject to 5% VAT.

2. NON-TAXABLE VAT ENTITIES

One of the major changes is the adjustment of the list of non-taxable goods and services. Accordingly:

a. Certain goods and services previously not subject to VAT will now be subject to 5% VAT, including:

- Fertilizers;

- Specialized machinery and equipment for agricultural production as per regulations of the Government;

- Fishing vessels at sea;

Additionally, the item "Sale of secured loan assets executed by credit institutions or enforcement agencies" is moved from non-taxable to subject to VAT according to the type of asset sold.

b. Newly added VAT-exempt items include:

Imported goods used for donation or aid for natural disaster, epidemic, or war relief, as prescribed by the Government.

3. VAT RATE ADJUSTMENTS FOR CERTAIN ITEMS

Some products currently taxed at 5% VAT will be adjusted to 10% VAT, including:

- Fresh food products in commercial trading; unprocessed forestry products;

- Sugar; by-products in sugar production (including molasses, bagasse, and dregs);

- Teaching and learning tools such as models, diagrams, blackboards, chalk, rulers, compasses;

- Cultural, exhibition, physical training, and sports activities; art performances; film production; import, distribution, and screening of films.

4. TIME OF VAT DETERMINATION

Supplemented and clarified provisions on the timing of VAT determination for domestic and export sales:

Domestic sales: at the time of transfer of the right to own or the right to use the goods to the buyer, or the time of issuance of the invoice.

Exports: determined by the seller, but no later than the next working day after customs clearance according to customs law

5. CONDITIONS FOR INPUT VAT DEDUCTION

The threshold for requiring non-cash payment evidence for purchased goods/services worth 5 million VND or more (VAT included) will apply from July 1, 2025

Additional documents such as packing slips, bills of lading, and insurance documents (if any) may now be used to support input VAT deduction for exported goods

6. NON-CASH PAYMENT DOCUMENTS

Newly recognized form: if an employee is authorized by the enterprise to make non-cash payments under internal financial or operational regulations, and the enterprise later reimburses the employee via non-cash methods, the input VAT is deductible.

In the case of installment or deferred payments (≥ 5 million VND), if by the due date specified in the contract or annex, there is no bank transfer proof, the previously deducted VAT amount must be declared and adjusted (reduced) in the tax period when the payment obligation arises.

7. VAT REFUNDS

Refund of VAT on exports: The rule allowing VAT refunds for goods that were imported and then exported is now abolished.

Refund of VAT on Investments: Additional eligibility for refund of VAT on expanded investment projects, including those started before July 1, 2025 but still in the investment phase.

New deadline for investment project VAT refund applications must be submitted within 1 year from the date of first revenue generation by the project or its stages/items.

Refund of VAT on goods/services subjects to 5%: Enterprises that only produce or supply 5% VAT goods/services, and have not deducted input VAT ≥ 300 million VND over 12 consecutive months or 4 consecutive quarters, are eligible for VAT refunds. Applies to input VAT arising from July 1, 2025 onwards.

Additionally, new rules apply to eligibility for VAT refunds:

The seller has submitted the VAT declarations dossier and no longer owes VAT incurred during the tax period that overlaps the claimant’s tax refund period.

If the tax authority determines that the seller has not fully submitted the VAT declaration dossier (even if VAT is claimed before the deadline for submission of the VAT declaration dossier) or still owes VAT incurred during the tax period that overlaps the claimant’s tax refund period, VAT on the invoices issued during the overlapping period will not be refunded. This provision applies for tax periods starting from July 2025 or Q3 2025.