W&A: TAX AND ACCOUNTING NEWSLETTER - DECEMBER 2024

The National Assembly has approved the proposal to reduce the Value-Added Tax (VAT) rate by 2% on goods and services currently subjected to the VAT rate of 10% for the first six months of 2025.

Additionally, the National Assembly passed laws amendments and supplemented the Law on Value-Added Tax, the Law on Personal Income Tax, the Law on Tax Administration and the Law on Accounting. We are pleased to summarize the key changes as follows.

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.         Non-taxable objects 

• Expanding and adding regulations for certain goods and services: This includes sectors such as construction insurance, oil and gas equipment, financial services, banking, securities trading, commerce, healthcare and animal health services, and imported goods.

• New provisions on exported products which are unprocessed mined resources or minerals: These products are regulated in line with the Government's orientation to limit the export of raw resources and minerals. Instead of applying the total value criterion for resources as before, the new regulation aims to gradually reduce the export of raw materials.

• Revise the annual revenue thresholds for business households and individual producers: Under the new law, the annual revenue threshold for determining VAT exemption is increased from 100 million VND to 200 million VND.

  
  

2.     Taxable price

• Removing the provision on leasing machinery, equipment, and transportation means from foreign countries for subleasing purposes: The previous regulation allowed a reduction in the taxable amount based on rental payments made to foreign entities if such items were not produced domestically. This provision has now been removed.

  
  

3.     The tax rate of 0% applies to the following goods and services:

• Goods and services exported for consumption outside Vietnam;

• Goods and services sold/provided to organizations in non-tariff areas and consumed within these areas directly supporting export production activities; goods sold in quarantine areas to individuals who have completed exit procedures; goods sold in duty-free shops;

• Other exported goods and services, including: international transportation; vehicle leasing services; services in the aviation and maritime industries; construction activities, installation of works, parts, and materials for repairing and maintaining vehicles, machinery, equipment; goods processed for export with supporting documentation proving consumption outside Vietnam.

• The tax rate of 0% does not apply in the following cases: technology transfer, intellectual property rights transfer abroad; reinsurance services abroad; credit granting services; capital transfer; derivatives products; postal and telecommunications services; imported tobacco, alcohol, and beer that are later exported; gasoline and oil purchased domestically and sold to businesses in non-taxable areas; cars sold to organizations or individuals in non-taxable areas.

  
  

4.     Changes to the objects subject to the tax rate of 5%:

• Reducing the number of goods and services subject to this rate, such as bottled and canned water and soft drink, sugar; by-products in sugar production;

• Adding machinery and equipment used for agricultural production, and fishing boats operating in offshore areas.

  
  

5.     Tax refund

• VAT refund for new investment projects or expansions during the investment phase applies if the outstanding input VAT amount is from 300 million VND or more. If the project is completed but the VAT refund has not been processed, the company must submit the VAT refund dossier in accordance with regulations within 1 year from the date the investment project, investment phase, or investment item, is completed.

  
  

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 to 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.

Contact W&A for more detailed information:

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📧 Email: nam.phan@waco.com.vn

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