VAT Rate Applied to Plant Seeds Sold to Farmers from 1 January 2026
RegHub explainer by New MarketerLast updated:
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The Ministry of Finance clarifies the VAT treatment of plant seeds sold by a deduction-method taxpayer to farmers from 1 January 2026. Under Article 5(2) of VAT Law No. 48/2024/QH15, plant propagation materials as defined by plant cultivation law are not subject to VAT. Therefore, if the seeds in question are classified as plant propagation materials under cultivation law, they fall outside the scope of VAT entirely - no VAT applies. Businesses must consult plant cultivation legislation to determine whether their specific seeds qualify as propagation materials, as that classification is the decisive criterion for VAT treatment.
Question
A deduction-method VAT taxpayer dealing in plant seeds asks: when selling plant seeds to farmers from 1 January 2026, does a 5% VAT rate apply? (The seeds were purchased at exempt or non-declarable rates.)
Official guidance
The Ministry of Finance responds on principle as follows:
Article 5(1) of VAT Law No. 48/2024/QH15 (as amended by point a, clause 1, Article 1 of Law No. 149/2025/QH15) excludes from VAT:
- Unprocessed (or only ordinarily pre-processed) plant, forestry, livestock, and aquatic products sold by the producer/harvester, and at the import stage.
- Enterprises, cooperatives, and cooperative unions that buy such unprocessed products and resell them to other enterprises, cooperatives, or cooperative unions are not required to declare or pay VAT, but may deduct input VAT.
Article 5(2) of VAT Law No. 48/2024/QH15 excludes from VAT:
- Livestock breeding products as defined by livestock law, and plant propagation materials as defined by plant cultivation law.
Conclusion: if the plant seeds are classified as plant propagation materials under plant cultivation law, they are not subject to VAT under Article 5(2). A 5% VAT rate does NOT apply.
Action points
- Consult plant cultivation legislation to confirm whether the specific seeds qualify as "plant propagation materials" (vat lieu nhan giong cay trong).
- If classified as plant propagation materials: no output VAT to declare or pay; input VAT remains deductible.
- If not so classified: apply the standard VAT rate under the general provisions of the VAT Law.
- Retain documentation supporting the classification under cultivation law for inspection purposes.