New Value Added Tax Law No. 48/2024/QH15 dated November 26, 2024, issued by the National Assembly, effective from July 1, 2025
The new law comprises 4 Chapters and 18 Articles, regulating subjects of taxation, non-taxable subjects, taxpayers, tax bases and calculation methods, as well as VAT deduction and refund mechanisms.
Key updates readers should note include:
1. Conditions for Input VAT Deduction
1.1. Payment Documents: Under the new law, non-cash payment documents are required for purchased goods and services, except in certain specific cases as stipulated by the Government.
Previous VAT law: Non-cash payment via bank transfer was required for purchased goods and services, except for goods and services purchased in single transactions valued under 20 million VND.
1.2. Additional Documentary Requirements: For exported goods and services, beyond the conditions outlined in points (a) and (b) of this provision, the following are now required: a contract with foreign parties for the sale, processing of goods, or provision of services; a sales invoice or service provision invoice; non-cash payment documentation; Customs declaration for exported goods; Packing slips, transport documents, insurance documents (if applicable). The Government will further stipulate deduction conditions for goods exported via overseas e-commerce platforms and other specific cases.
2. Supplementary VAT Declarations for Errors or Omissions
Taxpayers must supplement declarations in the month or quarter where errors or omissions in input VAT occur, if such errors increase the payable VAT amount or reduce the refundable VAT amount. Taxpayers must pay the additional payable tax amount, return the corresponding refunded tax, and pay late-payment penalties to the state budget (if any).
If errors or omissions reduce the payable VAT amount, or only affect the VAT carried forward, taxpayers can declare corrections in the month or quarter when the errors are discovered.
3. New Cases of VAT Refund Eligibility
Businesses exclusively producing goods or providing services subject to a 5% VAT rate will be eligible for VAT refunds if their input VAT exceeds 300 million VND and remains undeducted after 12 consecutive months or 4 consecutive quarters.
4. Additional Conditions for VAT Refunds
The seller must have declared and paid VAT in accordance with regulations for invoices issued to the business requesting the refund.
5. Increased Revenue Threshold for VAT Exemption for Household and Individual Businesses
Under the new law, goods and services of household and individual businesses with annual revenue of 200 million VND or less are exempt from VAT. (Previous threshold: 100 million VND.)
6. Scope of 0% VAT Rate Application
a) Exported goods include goods sold from Vietnam to foreign organizations or individuals for consumption outside Vietnam; goods sold domestically to organizations within free trade zones for consumption in such zones and directly serving export production activities; goods sold in isolation zones to individuals (foreigners or Vietnamese citizens) who have completed exit procedures; goods sold in duty-free shops.
b) Exported services include services provided directly to foreign organizations or individuals for consumption outside Vietnam; services provided directly to organizations in free trade zones for consumption in such zones and directly serving export production activities.
Previous regulation: There was no mention of “directly serving export production activities.”
In addition to the above, the new law revises and supplements provisions regarding: adjustments to certain goods and services exempt from VAT; adjustments to VAT rates for certain goods and services; and other related issues.
Effective Dates: The law will come into effect on July 1, 2025, except for the following provisions: the revenue threshold for VAT exemption for household and individual businesses under Clause 25, Article 5, and Article 17 of this law, which will take effect from January 1, 2026.
