NEWSLETTER ON NEW LAWS ON TAX, ACCOUNTING AND INSURANCE

We, W&A, would like to summarize the key changes introduced by the new laws and regulations on taxes (VAT, PIT, and tax registration), accounting, auditing, and health insurance as follows. Please feel free to contact us if you require further discussion.

I.          LAW ON VALUE-ADDED TAX (VAT)

The Law No. 48/2024/QH15 dated November 26, 2024 regarding Value Added Tax of the National Assembly will officially take effect in July 2025. This law introduces supplements and amendments to several important provisions, including:

1.     Taxpayers

The new law adds provisions regarding taxpayers engaged in e-commerce and digital platform-based business activities, specifically:

• Foreign suppliers without a permanent establishment in Vietnam engaging in e-commerce or digital platform-based business activities with organizations or individuals in Vietnam (hereinafter referred to as "foreign suppliers"); foreign digital platform operators are responsible for withholding and paying tax on behalf of the foreign suppliers; organizations in Vietnam applying the credit method for VAT that purchase services from foreign suppliers without a permanent establishment in Vietnam via e-commerce channels or digital platforms are also responsible for withholding and paying tax on behalf of the foreign suppliers.

• Organizations managing e-commerce trading floors or digital platforms with payment functions must withhold, declare, and pay tax on behalf of business households and individual businesses operating on the e-commerce trading floors or digital platforms.

  
  

2.     Non-Taxable Subjects

• The provision exempting enterprises or cooperatives that purchase unprocessed or minimally processed crop, livestock, and aquaculture products for resale to other enterprises or cooperatives from VAT declaration and payment (while still allowing input VAT credit) has been removed.

• The Government will regulate the list of exported products that are natural resources or minerals, both unprocessed and processed, that are non-taxable.

• The list of non-taxable goods and services has been expanded to include fields such as construction insurance, oil and gas equipment, financial services, banking, securities trading, commerce, medical and veterinary services, and imported goods.

• New provisions on the export of natural resources and minerals: These are now adjusted in line with state policy aimed at limiting raw resource exports. Instead of using total resource value criteria, the new rule focuses on gradually reducing raw material exports.

• The annual revenue threshold for determining non-taxable business households and individuals has been increased from VND 100 million to VND 200 million.

  
  

3.     0% VAT Rate Applies to the Following Goods and Services:

• Exported goods and services consumed outside of Vietnam.

• Goods and services sold/provided to organizations within non-tariff zones and consumed therein for the direct service of export production; goods sold in isolated areas to individuals who have completed exit procedures; goods sold in duty-free shops.

• Addition: Digital content products supplied to foreign parties with documentation proving offshore consumption as stipulated by the Government will also be subject to 0% VAT.

• Other exported goods and services including: international transportation; rental services for transport vehicles; aviation and maritime services; construction and installation abroad; spare parts, materials used for repair and maintenance of vehicles, machinery, equipment; and toll manufacturing for export with documentation proving offshore consumption.

• 0% VAT rate is not applicable in the following cases: technology transfer, transfer of intellectual property rights abroad; offshore reinsurance; credit provision services; capital transfer; derivative products; postal and telecommunications services; tobacco, alcohol, beer imported and re-exported; domestically purchased petrol/oil sold to businesses in non-tariff zones; cars sold to organizations or individuals in non-tariff zones.

  
  

4.     VAT Rates of 5% and 10%

A 10% VAT rate applies to services provided by foreign suppliers without a permanent establishment in Vietnam to Vietnamese organizations and individuals via e-commerce and digital platforms.

Goods previously non-taxable but now subject to 5% VAT:

• Fertilizer;

• Fishing vessels operating in sea areas.

Goods previously subject to 5% VAT but now increased to 10%:

• Unprocessed forest products.

• Sugar and by-products in sugar production including molasses, bagasse, and filter cake.

• Specialized equipment and tools used for teaching, research, and scientific experiments.

• Cultural, exhibition, sports, and art performance activities; film production, importation, distribution, and screening.

  
  

5.     Input VAT Credit

If a business discovers errors or omissions in input VAT when declaring or crediting before the tax authority or competent authority announces a tax inspection or audit decision, the following rules apply:

• If the error results in increased tax payable or reduced refundable tax, the taxpayer must declare the adjustment in the month or quarter in which the error arose and pay the additional tax and any late payment interest to the state budget (if applicable).

• If the error reduces the tax payable or only increases/decreases the input VAT to be carried forward, the taxpayer can declare the adjustment in the month or quarter when the error is discovered.

  
  

6.     Tax refund

• VAT refund is available for new or expanded investment projects during the investment stage if uncredited input VAT amounts to VND 300 million or more. If the project is completed but a refund has not yet been processed, the enterprise must submit a VAT refund dossier within 1 year from the date of project or investment phase/item completion.

• VAT refund for production and business activities: If a business only supplies goods or services subject to 5% VAT and has uncredited input VAT of VND 300 million or more over 12 consecutive months or 4 consecutive quarters, it is entitled to a VAT refund. If multiple VAT rates apply, the refund will be made based on an allocation ratio as prescribed by the Government.

• The provision allowing VAT refunds in cases of ownership change, business type conversion, mergers, consolidations, splits, or cessations of operations (except dissolution or bankruptcy) has been removed.

• Goods imported and then re-exported are not eligible for a VAT refund.

• Clarified regulations to avoid implementation issues regarding VAT refunds for investment projects, exported goods and services, and investment projects in conditional business lines that do not meet legal requirements or fail to maintain such conditions during operation.

  
  

II.        LAW ON PERSONAL INCOME TAX (PIT)

The amended law adds provisions on the responsibility of organizations managing e-commerce platforms and digital platforms in fulfilling personal income tax (PIT) obligations. Accordingly, these organizations are responsible for:

• Withholding and paying PIT on behalf of individuals doing business on the platform, if subject to withholding.

• Coordinating with tax authorities to ensure complete information and fulfill the tax payment obligations of individuals doing business on the platform.

  
  

III.      LAW ON TAX ADMINISTRATION

• For households and individuals conducting business on e-commerce and digital platforms: The platform manager is responsible for withholding, declaring and paying taxes on behalf of the business. However, if households and individuals are not subject to tax withholding and payment on behalf, they must directly register, declare, and fulfill their tax obligations with the tax authority.

• Taxpayers' right to submit supplementary tax documents: Taxpayers have the right to submit supplementary tax documents within 10 years before the tax authorities or competent agencies issue a decision on tax inspection or audit. The law also grants the right to submit supplementary tax documents in cases where the tax files fall outside the scope and the period of tax inspection or audit.

• New regulation on late payment interest: The new law regulates that the period for charging late payment interest is continuous, starting from the day after the last day of the tax payment deadline, tax extension deadline, or the deadline stated in the decision. This replaces the old regulation, which calculated late payment interest from the day the late payment amount was incurred.

• Removing the right of taxpayers to request the tax authority t pay an interest at 0.03% per day on the overpaid amount.

• Taxpayers shall not submit supplementary tax documents after the announcement of a tax inspection or audit decision.

• Removing the regulation on enforcement measures against the legal representative of an enterprise with outstanding tax liabilities: The provision requiring the legal representative to fulfill tax obligations before leaving the country and be subject to exit suspension has been removed.

  
  

IV.      LAW ON ACCOUNTING AND LAW ON INDEPENDENT AUDIT

• The language used in accounting: The regulation is amended to require language accounting documents must be translated into Vietnamese when requested by the competent authority.

• Accounting period: The provision stating that “the first or last annual accounting period is shorter than 90 days” is amended to “no more than three (3) monthly accounting periods”, which may be combined with the next or previous annual accounting period.

• Removing the regulation on recording the name and address of the entity receiving the accounting record in the content of accounting records.

• If  an audit contract is signed with an auditing firm for more than five (5) consecutive years, the auditing firm is required to change the practicing auditor who signs the audit report. The previous regulation set the period at three (3) consecutive years.

  
  

V.             TAX REGISTRATION

In addition to the key changes mentioned above, the Ministry of Finance has issued Circular 86/2024/TT-BTC, which introduces several new tax registration regulations. The Circular takes effect on February 6, 2025, replacing Circular 105/2020/TT-BTC. Key highlights of the Circular include:

1.      Use of personal identification numbers instead of tax identification numbers from July 1, 2025, for individuals subject to personal income tax (excluding business individuals), dependents, and other organizations, households, and individuals obligated to the state budget.

2.    Issuance of separate tax identification numbers for foreign contractors registering for direct tax payment with tax authorities when multiple foreign contractors are involved in the same contract with a Vietnamese party and wish to file and pay taxes separately.

3.      Detailed regulations on tax authorities’ verification of taxpayer activity status at the registered address, including:

• Receiving tax registration/change of e-invoice registration information from taxpayers classified as high-risk.

• Receiving information about the issuance of Enterprise Registration Certificates, Cooperative Registration Certificates, Partnership Registration Certificates, or Certificates of Operation Registration for dependent units of taxpayers classified as high-risk.

• Issuing Tax Registration Certificates for the first time or upon modification of tax registration details for taxpayers classified as high-risk.

  
  

VI.           LAW ON HEALTH INSURANCE

1.     Expanding the scope of mandatory health insurance participants: For the group whose contributions are paid by employees and employers:

• Employees working under indefinite-term labor contracts or fixed-term contracts of at least one month (previously, the requirement only applied to contracts of at least three months). This regulation also applies to contracts with different names but essentially labor contracts; part-time work agreements where the monthly salary is equal to or higher than the base salary for mandatory social insurance contributions.

• Management positions are required to participate in health insurance, regardless of whether they receive a salary. Additionally, the regulation specifies that management positions under this provision include enterprise managers, controllers, representatives of state capital, representatives of corporate capital under legal provisions, members of the Board of Directors, the General Director, the Director, members of the Supervisory Board or controllers, and other elected managerial positions in cooperatives and cooperative unions as stipulated under the Law on Cooperatives.

• Foreign employees working in Vietnam under labor contracts of at least 12 months, except for those under internal transfers or those who have already reached the retirement age at the time of contract signing.

• Household business owners.

2.     Adding regulations on the deadline for health insurance payment by employers:

• Monthly payment method: The last day of the following month;

• Quarterly or semi-annual payment method: The last day of the month immediately following the payment cycle.

3.     Regulations on health insurance entitlement levels when implementing cross-province medical treatment under HI, aims to eliminate administrative territorial limitations at the provincial level, maintaining the current HI entitlement rates under the existing Law and expanding coverage for specific cases.

4.     Adding definitions of late health insurance payments, health insurance evasion, and specific penalties.

5.     Changes in penalties for late health insurance payment: is 0.03% per day on the overdue health insurance amount, replacing the previous regulation that imposed a fine equal to twice the interbank interest rate.

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