Legal News

[Taxation] Changes to the requirements for export services under the revised Value Added Tax (VAT) Law

2024/12/06

On the afternoon of November 26, 2024, the National Assembly formally passed the amended Value Added Tax (VAT) Law (hereinafter referred to as the “Amended Law”) with a majority vote. The Amended Law will come into effect on July 1, 2025.

Under the Amended Law, there are changes to the scope of “export services” eligible for the 0% tax rate compared to the previous draft of the Value-Added Tax Law (hereinafter referred to as the “Draft”), with the details as follows:
1. Services directly provided to foreign companies or individuals and consumed outside Vietnam
2. Services directly supplied to companies in non-tariff zones and consumed in non-tariff zones for direct use in export production activities

The draft had previously limited the scope to three specific services: (1) transportation means rental services used outside Vietnam, (2) international transportation services, and (3) services directly provided by the aviation and shipping industries for international transportation. However, these provisions were revised during the legislative process and now align with the current law.

However, with the addition of the new requirement that services be “directly used in export production activities,” the conditions for applying a 0% tax rate to export services to non-tariff zones have become more stringent.

The amended law is scheduled to be issued by December 2024. We will provide updates on the latest information regarding the amended law in our newsletter as it becomes available.

References:
• Draft amendments and supplements to the Value-Added Tax Law No. 13/2008/QH12 of 2008
• Value-Added Tax Law No. 13/2008/QH12 of 2008
• Circular 219/2013/TT-BTC
• Website of the Vietnam National Assembly’s Electronic Information Portal:
https://quochoi.vn/tintuc/Pages/tin-hoat-dong-cua-quoc-hoi.aspx?ItemID=91315