“What is the Value Added Tax (VAT)? The Government of Vietnam applies a Value Added Tax (VAT) on the consumption of goods and services in Vietnam. The law on VAT was recently amended, with significant consequences for foreign investment and business interests in Vietnam.“
Which businesses are exempt from the VAT?
Under the 2014 Amendments to the Law on VAT, the following are not subject to the Value Added Tax: salt products; financial, banking, and securities services; products for export; goods and services provided by household and individual businesses.
Also, the updated Law has made amendments on non-taxable subject including health insurance, other insurances related to humans, other agricultural insurances, insurance for boats, ships, and other equipment necessary for fisheries.
On the other hand, public waste collection and water drainage services in streets and residential areas are no longer exempt from the VAT as of 2014.
The Law on Amendments to the Law on VAT has made amendments on which goods are subject to environmental protection tax, or both environmental protection tax and excise tax.
This Law has also annulled the regulations on hiring foreign machinery, equipment or means of transport which cannot be domestically manufactured for sublease.
Taxable prices of imported goods are imported prices at the border gate plus import tax (if any), plus excise tax (if any), plus environmental protection tax (if any).
The updated Law supplemented the definition of the goods and services subject to 0% VAT rate.
The tax rate of 5% is applicable to sale, lease, and hire purchase of social housing and has taken effect since July 1st, 2013.
The 10% VAT on the sale, lease, and hire purchase of commercial housing, which is finished apartments smaller than 70 m2 that are sold at below 15 million VND/m2, shall be reduced by 50% from July 01, 2013 until the end of June 30, 2014.
Tax Calculation Methods
On the method of calculating taxes, the updated law has amended and supplemented the tax deduction method and the method of direct calculation on VAT, including:
The update law has amended and supplemented that: