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Vietnam’s VAT Law for Farming and Animals
HANOI – Vietnam’s VAT law touches on a number of goods and services. Please see our latest magazine on the country’s VAT law, entitled A Guide to Understanding Vietnam’s VAT, in order to receive a general overview of what VAT is and how to properly ensure that you follow all regulations involved.
In this article, we examine the VAT implications for a number of goods and services listed under the Farming and Animals category in Vietnam’s VAT law.
Transactions related to certain products and services are viewed as non-taxable transactions, these include:
- Cultivation and husbandry products; reared and fished aquatic products which have not yet been processed into other products or have been just preliminarily processed and sold by producing and fishing organizations and individuals, and products at the stage of importation ;
- Salt products products made of seawater, natural rock salt, refined salt and iodized salt in which sodium chloride (NaCl) is a major component;
- Products which are animal breeds and plant varieties including breeding eggs, breeding animals, seedlings, seeds, sperms, embryos and genetic materials.Irrigation and drainage; soil ploughing and harrowing; dredging of intra-field canals and ditches for agricultural production; services of harvesting farm produce.
The importation of these products is not liable to VAT for the total value of goods in the import stage:
- Raw materials imported for the production or processing of goods for export under contracts signed with foreign parties.
In order to identify goods not liable to VAT at the stage of importation under this point, importers shall produce to customs offices documents as guided in the Ministry of Finance’s regulations on customs procedures; customs inspection and supervision; import and export duties and tax administration of imports and exports.
The Farming and Animals category has exposure to more than one tax category depending on what the good or service is. See below for further clarification.
0% Tax Rate
Applies to exported goods and services; work construction and installation for export processing enterprises; international transportation; goods and services not liable to VAT upon exportation.
Cases ineligible for the 0% tax rate are subject to the corresponding tax rates applicable to goods and services sold or provided domestically.
5% Tax Rate
Goods and services entitled to the tax rate of 5% include:
- Clean water for production and daily life, excluding bottled drinking water and other beverages;
- Fertilizers;
- Pesticides and plant and animal growth stimulants;
- Feed for animals;
- Fresh and raw foods; forest products, except timber, bamboo shoots;
- Sugar and by-products in sugar production;
- Specialized machinery and equipment for agricultural production;
- Products made of jute, rush, bamboo, rattan, leaves, straw, coir, coconut shells, water hyacinth, and other handicraft products made of raw materials from agricultural production;
- Preliminarily processed latex in the forms of crepe, sheet, strip or granule; preliminarily processed pine resin; nets, net ropes and cords for weaving fishing nets, assorted cords and ropes for exclusive use in weaving fishing nets, regardless of their production materials;
- Cultivation, husbandry, aquatic and marine products which are unprocessed or preliminarily processed;
- Services of digging, embanking and dredging canals, ditches, ponds and lakes for agricultural production; cultivating and tending plants and preventing and eliminating pests; and preliminarily processing and preserving agricultural products.
10% standard tax rate
Applies to all goods and services not otherwise specified. The VAT rates previously specified apply uniformly to each type of goods or service at the stages of importation, manufacture, processing and trading.
Exemptions
A variety of goods and service transactions may qualify to be exempted from VAT. It is best to contact a tax professional to ensure that all regulations are followed.
Deduction and Recovery of Input Tax- Saving Your Money
Business establishments which pay VAT according to the tax credit method are entitled to input VAT credit as follows:
Establishments engaged in agricultural or forestry production, aquaculture or fishing, organizing closed production processes, accounting their production and business results in a centralized manner, and using products at the stage of agricultural or forestry production; rearing and fishing aquatic or marine products as raw materials for further production and processing into VAT-liable products may declare and credit input VAT on goods and services purchased for production and business at all stages of capital construction investment, production and processing.
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Related Reading
In this issue of Vietnam Briefing, entitled A Guide to Understanding Vietnam’s VAT, we attempt to clarify the entire VAT process by taking you through an introduction as to what VAT is, who and what is liable, and how to pay it properly. We first take you through the basics of VAT in Vietnam before taking you deeper into the topic. Additionally, we provide updates on the new changes to the VAT process and explain how they will impact your business. The magazine is out now and will be temporarily available as a complimentary PDF download on the Asia Briefing Bookstore until the end of April.
Vietnam’s VAT Law for Machinery and Equipment
Vietnam’s VAT Law for the Financial Category
Vietnam’s VAT Law for Healthcare
Vietnam’s VAT Law for Imports/Exports
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- Next Article Vietnam’s VAT Law for the Healthcare Sector
