Value-added tax (VAT)
VAT applies to goods and services used for production, trading, and consumption in Vietnam (including goods and services purchased from non-residents), with certain exemptions. Depending on the category of goods or services, the VAT rates are as follows:
- A 0% rate applies to exported goods/services, including goods/services sold to overseas/non-tariff areas and consumed outside Vietnam/in the non-tariff areas, goods processed for export or in-country export (subject to conditions), goods sold to duty free shops, certain exported services, construction and installation carried out for export processing enterprises, and aviation, marine, and international transportation services.
- A 5% rate applies generally to areas of the economy concerned with the provision of essential goods and services. These include: clean water, teaching aids, books, unprocessed foodstuffs, medicine and medical equipment, husbandry feed, various agricultural products and services, technical/scientific services, rubber latex, sugar and its by-products, social housing, and certain cultural, artistic, and sport services/products.
- The 10% 'standard' rate applies to activities not specified as not subject to VAT, exempt, or subject to the 0% or 5% rate.
There is a draft law proposed to increase the VAT rates.
Goods or services where VAT declaration and payment are not required
A separate category includes supplies not subject to output VAT, but where related input VAT can, nevertheless, be credited. This category includes the following:
- Compensation, bonus, subsidies, except those provided in exchange for certain services.
- Transfers of emission rights and various financial revenues.
- Certain services rendered by a foreign organisation, which does not have a PE in Vietnam where the services are rendered outside of Vietnam, including repairs to means of transport, machinery, or equipment, advertising, marketing, promotion of overseas investment and trade, brokerage activities for the sale of overseas goods and services, training, and certain international telecommunication services.
- Sales of assets by non-business organisations or individuals not registered for VAT.
- Transfer of investment projects.
- Sale of agricultural products that have not been processed into other products or have only been through preliminary processing.
- Capital contributions in kind.
- Certain asset transfers between a parent company and its subsidiaries or between subsidiaries of the same parent company.
- Collections of compensation/indemnities by insurance companies from third parties.
- Collections on behalf of other parties that are not related to the provision of goods/services (e.g. if company A purchases goods/services from company B but pays to company C, and, subsequently, company C pays to company B, then the payment from company C to company B is not subject to VAT).
- Commissions earned by (i) agents selling services, including postal, telecommunications, lottery, airlines/bus/ship/train tickets, at prices determined by principals; and (ii) agents for international transportation, airlines, and shipping services entitled to 0% VAT; or (iii) insurance agents.
- Commissions from the sale of exempt goods/services.
- Goods exported and then re-imported back to Vietnam due to sales returns by overseas customers.
Exempt goods and services
There are stipulated categories of VAT exemptions, including certain agricultural products; goods/services provided by individuals having annual revenue of 100 million Vietnamese dong (VND) or below; imported or leased drilling rigs, aeroplanes, and ships of a type that cannot be produced in Vietnam; transfer of land use rights (LUR), excluding the transfer of LUR that was previously acquired from others if the transferor does not carry out any activities on such LUR since the last acquisition; various financial services; various securities activities including fund management; capital assignments; foreign currency trading; debt factoring; certain types of insurance; medical services and elderly/disabled people care service; education, printing/publishing, public transportation, export of unprocessed natural resources, etc.
When a supply cannot be readily classified based on the tax tariff, VAT must be calculated based on the highest rate applicable for the particular range of goods that the business supplies.
Taxpayers must file VAT returns on a monthly basis by the 20th day of the subsequent month or on a quarterly basis by the 30th day of the subsequent quarter (for companies with prior year annual revenue of VND 50 billion or less).
The government has released an official Decree on e-invoicing in September 2018, which became effective since 1 November 2018. The Decree makes e-invoices compulsory for all enterprises from 1 November 2020.
There are two types of e-invoices, as follows:
- E-invoices without verification code of the tax authorities are acceptable for enterprises in certain industries, such as electricity, petroleum, telecommunication, transportation, financial services, insurance, medicals, e-commerce, supermarket, trading, etc., and other enterprises, economic organisations that transacted or will transact with the tax authorities electronically and maintain technology infrastructure, accounting software, e-invoice software as regulated.
- E-invoices with verification code of the tax authorities are applicable for enterprises other than the above, or high risk enterprises must use e-invoices with verification code of the tax authorities.
Before using e-invoices (either with or without verification code), enterprises must register and obtain approval from the tax authorities via the web portal of the GDT.
In the transitional period (during the period from 1 November 2018 to 31 October 2020), enterprises already using e-invoices with/without verification code before the effective date of the Decree will continue using such e-invoices from the effective date of the Decree; enterprises using self-printed invoices, pre-printed invoices, or purchased invoices from the tax authorities before the effective date of the Decree will be allowed to continue using such invoices until 31 October 2020. From 1 November 2020, e-invoices must be used.
Import duty rates are classified into three categories: ordinary rates, preferential rates, and special preferential rates.
Preferential rates are applicable to imported goods from countries that have most-favoured-nation (MFN, also known as normal trade relations) status with Vietnam. The MFN rates are in accordance with Vietnam’s World Trade Organization (WTO) commitments and are applicable to goods imported from other member countries of the WTO.
Special preferential rates are applicable to imported goods from countries that have a special preferential trade agreement with Vietnam. Currently effective free trade agreements (FTAs) to which Vietnam is a party include FTAs between ASEAN member states, between ASEAN members and Japan, ASEAN and China, ASEAN and India, ASEAN and Korea, ASEAN and Chile, ASEAN and Australia, ASEAN and New Zealand, Vietnam and Japan, Vietnam and Chile, Vietnam and Korea, Vietnam and Cambodia, Vietnam and Laos, and Vietnam and the Eurasian Economic Union (Vietnam and the Customs Union of Russia, Belarus, Kazakhstan).
Vietnam has concluded three important agreements, the ASEAN - Hong Kong FTA (AHKFTA), the European Union FTA (EVFTA), and the Comprehensive and Progressive Trans-Pacific Partnership (CP-TPP). In addition, Vietnam is negotiating other agreements, including the Regional Comprehensive Economic Partnership (RCEP), the FTAs with European Free Trade Association (Vietnam and Iceland, Liechtenstein, Norway, and Switzerland), and with Israel.
Import duty exemptions are provided for encouraged projects and goods imported in certain circumstances.
Export duties are charged only on a few items, basically certain natural resources. Rates range from 0% to 40%. In case the customs values of the exported goods cannot be determined using the transaction value method, they will be determined by the customs authority using, sequentially, the following customs valuation bases: the transaction prices of identical and similar exported goods in customs’ pricing database, the selling prices of identical and similar goods in the local market with certain adjustments, or the selling prices of the exported goods collected, classified, and adjusted by the customs authority.
Other kinds of taxes potentially imposed on imports
In addition to import duty, SST, EPT, and import VAT, there are other kinds of taxes that may be applied to imported goods, subject to certain conditions. These taxes include anti-dumping tax, anti-subsidy tax, and safeguard tax, which are all considered as the supplemental import duties applicable to the imported goods under certain scenarios.
Special sales tax (SST)
SST is a form of excise tax that applies to selected goods and services (see below). For goods, SST is charged at the production or importation stage. Imported goods (except for various types of petrol) are subject to SST at both the import and selling stages. The SST paid at importation will be creditable against SST paid at the selling stage.
The SST rates are as follows:
||SST rate (%)
|From 1 January 2016 to 31 December 2018
|From 1 January 2019
|With ABV ≥ 20°:
|From 1 January 2018
|With ABV < 20°:
|From 1 January 2018
|From 1 January 2018
|Automobiles having less than 24 seats:
|From 1 January 2018
||10 to 150
|Motorcycle with cylinder capacity above 125cm3
||7 to 10
|Air-conditioners (not more than 90,000 BTU)
|Casinos, jackpot games
|Entertainment with betting
Foreign investors generally pay rental fees for land use rights. The range of rates is wide depending upon the location, infrastructure, and the industrial sector in which the business is operating.
In addition, owners of houses and apartments have to pay land tax under the law on non-agricultural land use. The tax is charged on the specific land area used based on the prescribed price per square metre at progressive tax rates ranging from 0.03% to 0.15%.
Certain assets, including houses, land, automobiles and motorcycles, etc., that are subject to registration of ownership are subject to stamp duty. The stamp duty rates vary depending on the asset transferred.
Social insurance (SI) and Unemployment insurance (UI) contributions are applicable to Vietnamese individuals only. Health insurance (HI) contributions are required for Vietnamese and foreign individuals that are employed under Vietnam labour contracts. Effective from 1 January 2018, SI contribution is also applicable to foreign individuals working in Vietnam under a work permit or practising certificate or licence.
Accordingly, from 1 January 2018, the salary subject to SI/HI/UI contributions is the salary, certain allowances, and other regular payments according to labour law, but this is capped at 20 times the minimum salary for SI/HI contributions and 20 times the minimum regional salary for UI contributions. Effective from 1 July 2018, the minimum salary is increased from VND 1,300,000 per month to VND 1,390,000 per month. Effective from 1 January 2018, the minimum regional salary varies from VND 2,760,000 per month to VND 3,980,000 per month. These minimum salaries are subject to change each year.
Social insurance (SI) contributions
The level of compulsory SI contribution for Vietnamese employees is 25.5% of total salary, of which 17.5% is the employers’ obligation and the remaining 8% is the employees’ obligation. SI contribution for foreign employees is 3.5% of total salary and some allowance. It is the employers’ obligation to cover sickness and maternity leave fund and occupational diseases and accident fund. It does not cover the retirement and death fund, which will be started for contribution from January 2022. The employees’ obligation is not required until January 2022.
Health insurance (HI) contributions
Compulsory HI contributions are applicable to both Vietnamese individuals and expatriates, except those transferred from their mother companies abroad to subsidiary firms in Vietnam (i.e. assignees).
HI contribution rates are 4.5% of total salary, with two-thirds contributed by the employer and one-third by the employee.
Salary/wage subject to HI contribution is capped at 20 times the minimum basic salary for HI contributions.
Unemployment insurance (UI) contributions
Compulsory UI contributions are applicable to Vietnamese individuals only. Expatriates are exempt. The employer and employee contributions are 1% on total salary and some allowance. The employee contribution is capped at 20 times the minimum regional salary for UI contributions.
Natural resources tax (NRT)
NRT is payable by industries exploiting Vietnam’s natural resources, including petroleum, minerals, natural gas, forest products, natural seafood, natural bird’s nests, and natural water. Natural water used for agriculture, forestry, fisheries, salt industries, and sea water for cooling purposes may be exempt from NRT, provided that certain conditions are satisfied. The tax rates vary depending on the natural resource being exploited, ranging from 1% to 40%, and are applied to the production output at a specified taxable value per unit. Various methods are available for the calculation of the taxable value of the resources, including cases where the commercial value of the resources cannot be determined. Crude oil, natural gas, and coal gas are taxed at progressive tax rates depending on the daily average production output.
Environment protection tax (EPT)
EPT is an indirect tax that is applicable to the production and importation of certain goods deemed detrimental to the environment, the most significant of which are petroleum and coal. The tax is calculated as an absolute amount on the quantity of the goods.
Since 1 January 2019, the tax rates are as follows:
||Tax range (VND)
|Petrol, diesel, grease, etc.
||1,000 to 4,000
||15,000 to 30,000
|Plastic bags *
|Restricted use chemicals
||500 to 1,000
* Excludes plastic bags used for packaging or that are 'environmentally friendly'.