Highlights of the 2024 Value Added Tax Law

The Law on Value Added Tax 2024 was passed by the National Assembly at the 8th Session, consisting of 4 chapters and 18 articles, effective from July 1, 2025. In addition to the contents inherited from the provisions of the current Law, the newly amended and supplemented contents are mainly related to taxpayers, subjects not subject to value added tax, taxable prices, tax rates, input value added tax deductions, etc.

The Law on Value Added Tax (amended) increases the annual revenue not subject to value added tax of business households and individuals from VND 100 million to VND 200 million.

Below are the new highlights of the 2024 Law on Value Added Tax.

1. About taxpayers

Supplementing regulations on taxpayers for e-commerce business activities and digital platform-based business activities, specifically:

- Foreign suppliers without a permanent establishment in Vietnam that conduct e-commerce business or digital platform-based business with organizations and individuals in Vietnam (hereinafter referred to as foreign suppliers); organizations that are managers of foreign digital platforms that deduct and pay tax obligations on behalf of foreign suppliers; business organizations in Vietnam that apply the value-added tax calculation method of deducting tax on purchased services from foreign suppliers without a permanent establishment in Vietnam through e-commerce channels or digital platforms that deduct and pay tax obligations on behalf of foreign suppliers.

- The organization is the manager of an e-commerce trading floor, the manager of a digital platform with the function of making payments, deducting, paying taxes on behalf of, and declaring deducted taxes for business households and individuals doing business on e-commerce floors and digital platforms.

2. Regarding subjects not subject to value added tax

- Eliminate the regulation: Enterprises and cooperatives that purchase unprocessed agricultural, livestock, aquaculture, and fishing products or that have only undergone normal preliminary processing and sell them to other enterprises and cooperatives do not have to declare or pay taxes. value added tax but input VAT is deductible.

- Increase the annual revenue not subject to value added tax of business households and individuals from 100 million VND to 200 million VND.

- The Government is assigned to prescribe the List of exported products which are resources and unprocessed minerals and exported products which are resources and processed minerals that are not subject to value added tax.

- Add to the list of non-taxable objects: (i) Fees specifically stated in the Loan Agreement of the Vietnamese Government with the foreign lender; (ii) imported goods from abroad of a financial leasing company transported directly into the duty-free zone for financial leasing to enterprises in the duty-free zone; (iii) imported goods to support and sponsor the prevention, combat and overcoming of consequences of disasters, natural disasters, epidemics and wars according to Government regulations; (iv) national relics, antiques and treasures according to the provisions of the law on cultural heritage imported by competent state agencies.

In addition, amend regulations to clearly define a number of groups of goods and services to be consistent with specialized laws, avoiding difficulties in implementation such as: securities trading; derivative products; defense and security products;...

3. About taxable price

- Amend the regulations on tax calculation prices for imported goods to ensure compliance with export tax and import tax laws.

- Supplementing regulations on determining deductible land prices when determining taxable prices for real estate business activities, taxable prices for specific production and business activities (electricity production activities of Vietnam Electricity Group; transportation, loading and unloading; tourism services in the form of travel; pawn services; books subject to value-added tax sold at the correct published price (cover price);...) according to Government regulations to suit the current situation.

4. About tax rates

a) Regarding the subjects applying 0% tax rate

- Supplementing regulations clearly stating that exported goods and services are goods and services directly supplied to organizations and individuals abroad and consumed outside Vietnam; directly supplied to organizations in duty-free zones and consumed in duty-free zones to directly serve export production activities.

- Supplementing regulations on digital information content products provided to foreign parties and having records and documents proving consumption outside Vietnam according to Government regulations are subject to a 0% tax rate.

b) Regarding the subjects applying the 5% tax rate

- Amending regulations on fertilizers, fishing vessels in coastal areas; specialized machinery and equipment serving agricultural production according to Government regulations subject to a 5% tax rate.

- Clearly stipulate that traditional and folk performing arts activities are subject to a 5% tax rate.

In addition, supplement the principle of applying tax rates in cases where business establishments trade in many types of goods and services with different value-added tax rates or in cases where agricultural products are used as animal feed or medicinal materials to ensure consistent application and avoid different interpretations.

5. On input VAT deduction

- Amend regulations for cases where business establishments discover that input value-added tax when declaring or deducting is incorrect or incomplete to avoid problems in implementation.

- Add the calculation of non-deductible input value-added tax into expenses for calculating corporate income tax or into the original price of fixed assets according to the provisions of the law on corporate income tax to ensure the stability of the policy.

- Supplementing regulations on input VAT deduction for the following cases: goods and services forming fixed assets for employees, cases of capital contribution in the form of assets; goods and services purchased under authorization for other organizations and individuals with invoices bearing the name of the authorized organization or individual; fixed assets being passenger cars with 9 seats or less; production and business establishments with closed production and centralized accounting shall comply with Government regulations to ensure compliance with the actual situation.

- Clearly stipulate the condition for input VAT deduction is having non-cash payment documents for purchased goods and services, except for some special cases as prescribed by the Government.

- Add some documents (packing notes, bills of lading, cargo insurance documents (if any)) to the conditions for input VAT deduction for exported goods and services to avoid fraud in tax deduction and refund.

6. About value added tax refund

- Supplement regulations on tax refunds in cases where business establishments produce goods and provide services subject to the 5% value-added tax rate to conform to actual situations and avoid difficulties in implementation.

- Supplementing regulations that imported goods then exported to other countries are not eligible for tax refund.

- Clearly stipulate to avoid difficulties in implementation of value added tax refund for investment projects; tax refund for exported goods and services; no value added tax refund for investment projects of business establishments in conditional investment and business sectors when they do not meet the business conditions as prescribed by law on investment or do not ensure to maintain sufficient business conditions during operation.

- Supplement regulations on tax refund conditions and responsibilities of taxpayers and tax authorities in tax refund to ensure feasibility in implementation.

In addition, the Law on Value Added Tax adds 2 Articles regulating the time for determining value added tax and prohibited acts in tax deduction and refund to ensure policy transparency.

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