Vietnam Value Added Tax (VAT) is an indirect tax, the cost of which ultimately falls on the consumer. The majority of transactions involving the supply of goods, the provision of services and imports will be subject to this tax.
Broadly, VAT is levied on the value added at each stage of the production and distribution supply chain. Registered businesses act as collection points for the Value Added Tax department.
VAT is calculated based on the added value from each stage of the supply chain, from manufacturing to distribution and consumption.
The general rate of VAT in Vietnam which applies to goods and services is 10%. A reduced rate of 5% also applies to certain goods and services.
Other than Value Added Tax, Vietnam also levies a Special Sales Tax (SCT) which is applicable to goods and services classified as luxury. The rates are from 10% to 70% for SCT (refer to ‘Special Sales Tax’ section above).
The VAT rate is calculated based on the selling price (exclusive of tax).
Taxable transactions – VAT and Special Consumption Tax (SCT) are levied on the sale of goods and the provision of services.
Registration – All organizations and individuals carrying on the production or trading of taxable goods and services in Vietnam must register for VAT. Each branch or outlet of an enterprise must register separately and declare tax on its own activities. Transfers of goods between branches may be subject to VAT. Registration for tax payment is required within 10 days of a corporation’s establishment date. VAT payable by a corporation is calculated by the tax credit method or calculated directly on the basis of added value.
Filing and payment – Monthly filing and payment of outstanding VAT must be made on or before the 20th of the following month.
If an enterprise’s input VAT exceeds its output VAT during 12 consecutive months, it can claim a refund from the authorities.
In certain cases (e.g. exporters where excess input VAT credits exceed VND300 million), a refund may be granted on a monthly/ quarterly basis. Newly established entities in the pre-operation investment phase may claim VAT refunds on a yearly basis or where the accumulated VAT credits exceed VND300 million.
Newly established entities and certain investment projects which are in the pre-operation stage may be entitled to refunds for VAT paid on imported fixed assets based on shorter timelines than normal, subject to certain conditions.