The Ministry of Finance is preparing a Decree to amend Decree No. 181/2025/ND-CP regarding the VAT Law. It outlines VAT exemptions for unprocessed and minimally processed agricultural, forestry, livestock, and aquaculture products sold by producers, while a 5% VAT applies to others. The draft clarifies VAT calculation methods, exemption cases, and non-declaration requirements. Importantly, it suggests removing Clause 3, Article 37 to streamline VAT refunds, ensuring sellers' VAT declarations facilitate buyer refunds effectively.
Vietnam: Draft Regulations Define Cases Exempt from VAT Declaration and Payment
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Author: Ema Stamenković
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Content accuracy validation date:
25.12.2025
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08:52h
The Ministry of Finance is drafting a Decree to amend and supplement certain articles of Decree No. 181/2025/ND-CP (dated July 1, 2025), which details the implementation of provisions in the Value Added Tax (VAT) Law.
The VAT Law No. 48/2024/QH15 provides that:
- Unprocessed or only basically processed plant products, planted forests, livestock, aquaculture products, and harvested aquatic products, produced/caught and sold by organizations/individuals themselves (or at import stage), are VAT-exempt.
- Such products not produced/caught and sold by the producers themselves (or at import stage, excluding wood and bamboo shoots from planted forests) are subject to 5% VAT.
The VAT Law specifies two calculation methods:
- Deduction method: Applied by businesses, cooperatives, and cooperative unions (except those with annual revenue below VND 1 billion who do not voluntarily apply it).
- Direct calculation method: Applied by individual households and businesses.
To ensure clarity, transparency, and avoid practical difficulties, the draft specifies cases for VAT exemption, 5% rate, no declaration/payment requirement, and direct calculation for sales of unprocessed or minimally processed agricultural, forestry, livestock, and aquaculture products.
In the draft, the Ministry proposes amending Clause 1, Article 4 (objects not subject to VAT) of Decree No. 181/2025/ND-CP as follows:
Unprocessed or only basically processed products from crops, planted forests, livestock, aquaculture, and fisheries, produced/caught and sold by organizations/individuals, and at the import stage. This includes:
- Basically processed products: Those that have undergone cleaning, drying, peeling, milling, crushing, grinding, shelling, separation, cutting, polishing, coating, dividing into parts, deboning, chopping, skinning, crushing, rolling thin, salting, canning in airtight containers, refrigeration (chilled/frozen), preservation with sulfur dioxide or other anti-spoilage chemicals, soaking in sulfur or other preservation solutions, and other common preservation methods.
- If undetermined, the Ministry of Agriculture and Rural Development (not Environment) will decide based on the taxpayer-provided production process, confirming whether the product is unprocessed or only basically processed by the producing/catching and selling organization/individual, or at import stage
- Enterprises, cooperatives, and cooperative unions using the deduction method, when selling unprocessed or minimally processed agricultural/forestry/livestock/aquaculture/fishery products to other enterprises, cooperatives, or cooperative unions in the commercial trading stage, are not required to declare or pay VAT. On the VAT invoice, record the selling price excluding VAT, and leave the tax rate and VAT amount lines blank or crossed out.
- When such entities (using deduction method) sell these products to households, individual producers/businesses, or other organizations/individuals (excluding those in point b), VAT must be calculated at the 5% rate per point d, Clause 2, Article 9 of the VAT Law.
- Households, individual businesses, enterprises, cooperatives, cooperative unions, and other economic organizations using the direct calculation method, when selling unprocessed or basically processed agricultural/forestry/livestock/aquaculture products in the commercial trading stage, calculate payable VAT as 1% of revenue.
Additionally, Decree No. 181/2025/ND-CP requires that sellers must have declared and paid VAT for buyers to qualify for refunds at the time of application. To align with amendments to the VAT Law, remove bottlenecks, and resolve difficulties in VAT refunds, the Ministry proposes abolishing Clause 3, Article 37 of Decree No. 181/2025/ND-CP.
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