New features of the Value Added Tax Law No. 48/2024/QH15

The new notable points in the new Law on VAT No. 48/2024:

1. Adjustment of VAT-exempt entities

• Remove some entities exempt from VAT according to current regulations, including:
  • Fertilizers; machinery and equipment specially used for agricultural production; offshore fishing vessels;
  • Securities custody; market organization services of stock exchanges or securities trading centers; other securities business activities...
  • Export products that are resources or minerals processed into other products exempt from VAT must follow the list specified by the Government.

• Add imported goods for donations and support for disaster prevention, disease outbreaks, and wars as VAT-exempt entities according to Government regulations.

2. Amendment of the tax calculation price for imported goods

Article 7 of the 2024 VAT Law stipulates that the tax calculation price for imported goods is amended to be the import tax value according to export and import tax laws, plus any supplemental import taxes as specified by law (if applicable), plus special consumption tax (if applicable), and plus environmental protection tax (if applicable).

3. Addition of tax calculation price for promotional goods and services

The tax calculation price for goods and services used for promotion, according to commercial law, is determined to be 0.

4. Adjustment of tax rates for certain goods and services

• Add some entities subject to a 0% tax rate:
  • Goods sold in quarantine areas to individuals (foreigners or Vietnamese) who have completed exit procedures; goods sold at duty-free shops;
  • Export services including: International transport, rental services for transportation means used outside Vietnam; services from the aviation and maritime sectors provided directly or through agents for international transportation.
  • Note: Cases where the 0% tax rate does not apply include: Technology transfer, transfer of intellectual property rights abroad; Reinsurance services abroad; Credit granting services; Capital transfer; Derivative products; Postal and telecommunications services; Export products that are natural resources; Tobacco, alcohol, and beer imported and then exported; Gasoline and oil purchased domestically and sold to businesses in the non-taxable zone; Cars sold to organizations and individuals in the non-taxable zone.
• Products that were previously exempt from tax and are now subject to a 5% tax:
  • Fertilizers;
  • Fishing vessels in marine areas.
• Products subject to a 5% tax now subject to a 10% tax:
  • Unprocessed forest products;
  • Sugar; by-products in sugar production, including sugar dust, bagasse, and sludge;
  • Specialized equipment and tools for teaching, research, and scientific experiments;
  • Cultural activities, exhibitions, physical education, sports; artistic performances; film production; import, distribution, and screening of films.

5. Change in input VAT deduction conditions

• For purchases of goods and services, a non-cash payment document is required, except in certain specific cases as regulated by the Government.
• Add some documents eligible for input VAT deduction:

  According to Point c, Clause 2, Article 14 of the 2024 VAT Law, for exported goods and services, packing slips, waybills, and insurance documents (if applicable) can be deducted for input VAT, except in certain specific cases as regulated by the Government.

6. Addition of tax refund cases

• Business establishments that only produce goods and provide services subject to a 5% VAT rate, if they have input VAT that has not been fully deducted from 300 million VND or more after 12 months or 4 quarters, can apply for a VAT refund.
• Clarification on VAT Refunds for Investment Projects: Business establishments that have registered to pay value-added tax (VAT) using the deduction method and have investment projects (including new investment projects or expansion projects) as per investment laws (including projects divided into multiple investment phases or components, except in cases where the investment project does not form fixed assets for the enterprise) that are in the investment phase, or oil and gas exploratory and development projects in the investment phase, may have input VAT that arises during the investment phase and has not yet been refunded. These businesses can offset this input VAT against the VAT payable from their ongoing production and business activities (if applicable). After offsetting, if the input VAT from the investment project that has not been fully deducted is 300 million VND or more, they are eligible for a VAT refund.

7. Article 17. Amendment and Supplement to Clause 1, Article 3 of the Personal Income Tax Law No. 04/2007/QH12, which has been amended and supplemented by Law No. 26/2012/QH13 and Law No. 71/2014/QH13.

“1. Income from business activities, including:

a) Income from the production and trading of goods and services;

b) Income from the independent practice of individuals who hold licenses or professional certificates as prescribed by law.

Income from business activities specified in this clause does not include income of households or individuals engaged in production and business with revenue below the threshold specified in Clause 25, Article 5 of the Value Added Tax Law.”