Q&A: VAT rate applicable to cashew shell residue recovered as a by-product during production
RegHub explainer by New MarketerLast updated:
This explanation was generated by AI and checked by an automated AI review, not by a human expert. It is not legal, tax or accounting advice and may contain errors. Check the official document before you rely on it.
Tax Sub-department No. 10 of Dong Nai province clarifies the VAT treatment for cashew shell residue (a by-product recovered when pressing oil from cashew shells). From 1 July 2025 to 31 December 2025: enterprises and cooperatives using the VAT credit method that sell cashew shell residue to other enterprises or cooperatives must apply the standard VAT rate of 10%. From 1 January 2026 (when Law No. 149/2025/QH15 takes effect): enterprises and cooperatives using the VAT credit method that sell cashew shell residue to other enterprises or cooperatives are NOT required to declare or pay VAT on these sales.
Question
A company (using the VAT credit method) purchases cashew shells from domestic enterprises to press for oil; the by-product recovered in the production process is cashew shell residue (bã vỏ hạt điều). When selling this residue (from 1 July 2025 to 31 December 2025, and from 1 January 2026), does the company fall under the case of not being required to declare and pay VAT, or does the 10% VAT rate apply?
Official guidance
Tax Sub-department No. 10 of Dong Nai province bases its guidance on:
- Clauses 3 and 5, Article 9 of VAT Law No. 48/2024/QH15 dated 26/11/2024, governing VAT rates.
- Clauses 1 and 2, Article 1 of Law No. 149/2025/QH15 dated 11/12/2025, amending certain articles of the VAT Law.
- Official Dispatch 3418/CT-CS of the General Department of Taxation on VAT policy for cashew shell residue.
Pursuant to GDT Dispatch 3418/CT-CS: from 1 January 2026, where an enterprise or cooperative using the VAT credit method purchases cashew shells to press for oil and recovers by-products (cashew shell residue or cashew husk meal), sales of that residue to other enterprises or cooperatives are NOT required to be declared or subject to VAT.
Conclusions:
- From 1 July 2025 to 31 December 2025: enterprises and cooperatives (VAT credit method) selling cashew shell residue to other enterprises or cooperatives must apply the 10% VAT rate.
- From 1 January 2026: enterprises and cooperatives (VAT credit method) selling cashew shell residue to other enterprises or cooperatives are not required to declare or pay VAT.
Action points
- For sales of cashew shell residue from 1 July 2025 to 31 December 2025: declare and pay VAT at 10%.
- For sales from 1 January 2026 onward: no VAT declaration or payment required when selling to other enterprises or cooperatives.
- Retain copies of GDT Dispatch 3418/CT-CS and the Dong Nai Tax Sub-department guidance for future tax audits or inspections.