Value Added Tax, or VAT, is one of the taxes that a consumer pays in Vietnam when they purchase goods and services for production, consumption, and trading. The VAT applies to goods and services purchased from foreign sources as well. However, there are exempted goods or services that attract VAT.
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The concept of a VAT is that the tax is imposed on the value added to the goods or services at each production stage, from raw materials to manufacturing to distribution to end consumers.
The rate of the VAT depends on the type of goods or services you sell. Therefore, as a business owner, you are also a VAT middle man who collects the VAT from the customers and then pays it forward to the government.
When Should You Register for VAT in Vietnam
Entreprises and organizations that trade and import goods and services into Vietnam are required to register for VAT immediately once they have received their business license. No registration threshold is applicable in this case.
VAT Compliance in Vietnam for 2021
Monthly VAT in Vietnam must be filed and submitted by the 20th of the following month; quarterly VAT in Vietnam is allowed for taxpayers with turnover of no more than VND 50 billion in the previous, or allowed for the new company and it must be declared and paid by the 30th of the following month at the end of each quarter. Monthly VAT or Quarterly VAT must be apply stably for the whole financial year
Please note that all tax invoices must be issued.
From 01st November 2021, starting apply to use of electronic invoices (e-invoices) in 6 provinces and cities, include: Ha Noi, Ho Chi Minh City, Quang Ninh, Hai Phong, Phu Tho and Binh Dinh. From 01st July, 2022, e-invoices are applied nationwide officially.
Applicable 2021 VAT Rates
In general, the standard rate of VAT in Vietnam is set at 10%. A 0%, 5% VAT rate, or VAT-exempted applies to specific food, products or services.
- High VAT rate: luxury goods – 15%
- Standard VAT rate: all other taxable goods and services – 10%
- Reduced VAT rate: basic food and beverages, essential goods, transports, agricultural production and services, medical equipment – 5%
- Zero VAT rate: international transportation, exported goods, and services, overseas construction, agricultural equipment, animal feed, fertilisers
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How to Calculate VAT
There are two methods to calculate the VAT, the credit method and the direct method:
- Credit method: VAT payable (refundable) = output VAT – input VAT
- Direct method: VAT payable = turnover x tax rate
Refunds of VAT in Vietnam are available only when taxpayers meet certain criteria:
- Exporters in Vietnam with their VAT credits of more than VND 300 million for their export transactions
- Companies using the credit method calculation with new projects that are in the pre-operation investment phases. The accumulated VAT credits have to be more than VND 300 million
VAT Exemptions
- Financial services
- Transfer of land use rights
- Certain agricultural products
- Securities activities
- Foreign currency services
- Capital assignments
- Selected insurance activities
Outsource Taxation to Cekindo to Ensure Compliance
Cekindo provides a wide selection of taxation outsourcing services for our clients in Vietnam.
Our outsourcing solutions in Vietnam aid small-medium enterprises, as well as numerous prominent firms. Apart from being considered as one of the most reputable taxation outsourcing providers in Vietnam, we have also built a large and prominent client base in all Vietnamese provinces.
Furthermore, Cekindo’s outsourcing services consist of handling and supporting business operations including bookkeeping, payroll processing, invoice processing, and other critical accounting functions.
Cekindo is strategic, dedicated, and progressive, offering customised services to strengthen your business’ competitive positioning and financial health to achieve your business objectives.
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