VAT Rate for Domestically-Sold Frozen Seafood that has Undergone Basic Processing
RegHub explainer by New MarketerLast updated:
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The Ministry of Finance clarified the VAT rate for domestically sold frozen seafood that has undergone only basic (simple) processing — cleaning, sorting, cutting, blast-freezing, and cold-storage at below -18°C. Under VAT Law 48/2024/QH15 (amended by Law 149/2025/QH15) and Decree 181/2025/ND-CP (amended by Decree 359/2025/ND-CP, effective 1 January 2026), cold storage and freezing are explicitly listed as basic processing operations. Consequently: self-producing or self-catching entities that sell such products are VAT-exempt (outside the scope of VAT). Enterprises or cooperatives buying and reselling to other enterprises/cooperatives are not required to declare and pay VAT but may claim input VAT credits. Sales to individuals or other parties attract a 5% VAT rate. Business households using the direct method pay 1% of revenue.
Ministry of Finance Guidance on VAT for Frozen Seafood (22 May 2026)
Business question: For seafood products that only go through cleaning, sorting, cutting, blast-freezing, and cold-storage at -18°C — with no marinating, flavoring, or transformation into a different product — what VAT rate applies for domestic sales?
Legal basis:
- VAT Law 48/2024/QH15 (amended by Law 149/2025/QH15)
- Decree 181/2025/ND-CP dated 1 July 2025 (amended by Decree 359/2025/ND-CP dated 31 December 2025, effective 1 January 2026)
Definition of Basic Processing
Under clause 1, Article 4 of Decree 181/2025/ND-CP, products that have undergone only basic processing include those subjected to: cleaning, drying, peeling, cutting, cold storage (chilled or frozen), sulphur-dioxide preservation, immersion in preservation solutions, and other standard preservation methods.
Cold storage / freezing at -18°C qualifies as basic processing under the law.
VAT Rate Matrix
| Entity type | VAT treatment |
|---|---|
| Self-producing or self-catching entities selling the product | VAT-exempt (outside scope) |
| Enterprises/cooperatives buying and reselling to other enterprises/cooperatives (deduction method) | Not required to declare or pay VAT; eligible for input VAT credit |
| Enterprises/cooperatives selling to individuals or other entities (deduction method) | 5% |
| Business households or direct-method taxpayers selling at the commercial stage | 1% of revenue |
| Deeply processed, marinated, or fundamentally altered seafood products | 10% |
Note: If it is unclear whether a product qualifies as basic processing or deep processing, the Ministry of Agriculture and Environment should be consulted for a determination.