Value-Added Tax (VAT) plays a crucial role in regulating the economy, contributing to State revenue, and also supporting economic development during various periods. Currently, this matter is governed by the VAT Law 2008, amended and supplemented by laws in 2013, 2016, and other legal documents (hereinafter referred to as “the prevail VAT Laws”).
On November 26, 2024, at the 8th session of the XV National Assembly of the Socialist Republic of Vietnam, the Value-Added Tax Law 2024 was passed, will take effect from July 1, 2025, this law shall bring significant changes, especially in the tax calculation methods for goods, services and tax deduction provisions. These amendments are expected not only to enhance fairness in tax collection but also to facilitate enterprises and social development.
Following ATA's article last week updating the key changes in the VAT Law 2024 (insert link), this article continues to analyze several prominent new provisions that businesses should pay special attention to when supplying goods and services.
1. VAT deduction is only allowed with non-cash payment documents
Under current regulations, VAT deduction is not required to be accompanied by non-cash payment documents for goods or services purchased in transactions valued at less than VND 20 million. However, Clause 2, Article 14 of the VAT Law 2024 adds a provision requiring that all purchase transactions, regardless of value, must have non-cash payment documents to meet the conditions for VAT deduction, except for special cases stipulated by the Government.
This provision demonstrates stricter management of business transactions, aiming to prevent tax losses and reduce instances of fake invoices.
2. Additional cases eligible for VAT refunds
The new VAT Law 2024 includes provisions for VAT refunds in cases where a business exclusively manufactures goods or provides services subject to a 5% VAT rate. These businesses are eligible for a refund if the uncredited input VAT amount reaches VND 300 million or more after 12 consecutive months or 4 consecutive quarters.
Additionally, for businesses producing goods or providing services subject to various VAT rates, the refundable tax amount will be determined based on an allocation ratio prescribed by the Government.
The VAT Law 2024 will take effect from July 1, 2025, except for: (+) The definition of VAT stipulated in Article 2 of this Law; (+) Provisions on revenue thresholds for households and individuals engaged in production and business activities exempt from tax under Clause 25, Article 5, and Article 17 amending and supplementing Clause 1, Article 3 of the Law on Personal Income Tax (amended by Law No. 26/2012/QH13 and Law No. 71/2014/QH13), which will come into effect from January 1, 2026.
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