General issues about value added tax (VAT) in Vietnam (Part 1)

General issues about value added tax (VAT) in Vietnam (Part 1)

Following my recent topic about corporate income tax in Vietnam, today I am addressing general issues about value added tax in Vietnam (Part 1).

Taxable goods and services

Value Added Tax (VAT) in Vietnam is a broad-based consumption tax, similar to Goods and Service Tax (GST) in Singapore.

Goods and services subject to VAT are those used for production, trading, and consumption in Vietnam (including those purchased from overseas), except for the goods and services not subject to VAT prescribed in Article 4 of Circular 219/2013/TT-BTC dated December 31, 2013.

Taxpayers of VAT

VAT taxpayers are the organizations and individuals that manufacture, trade in taxable goods and services in Vietnam, the organizations and individuals that import goods or purchase services from abroad.

Tax basis          

Tax basis is taxable selling prices (exclusive of tax) and tax rates.

Time for calculating VAT

For goods sale, VAT shall be calculated when the ownership or the right to use goods is transferred to the buyer, whether the payment is made or not. For service provision, VAT shall be calculated when service provision is completed or when the VAT invoice for service provision is made, whether the payment is made or not.

VAT rates

There are three VAT rates: The standard VAT rate in Vietnam which applies to goods and services is  10%. A reduced rate of 5% also applies to certain goods and services. Ze-ro rated VAT (0% VAT) is applied to exported goods and services; construction and installation overseas and in free trade zones; international transport; exported goods and services that are not subject to VAT, except for the cases in which 0% VAT is not applied as prescribed in Clause 3, Article 9, Circular 219/2013/ TT-BTC dated December 31, 2013.

Value added tax (VAT) in Vietnam (Part 1)

 
Prepared by:
Thi-Ha Nguyen, ACCA 
DMS Law firm in Vietnam
Approved by:
Drector
Lawyer Do Minh Son 

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