Knowledge base

Ho Chi Minh City Tax Authority (Unit 17) responded to PLB Vietnam Co., Ltd. regarding the VAT rate applicable to industrial chains under Decree 174/2025/ND-CP dated 30 June 2025 on VAT reduction pursuant to Resolution 204/2025/QH15 (effective 1 July 2025 to 31 December 2026). The guidance states that where a business sells goods currently subject to 10% VAT that do not appear in Appendix I or Appendix II attached to Decree 174/2025/ND-CP, the reduced VAT rate applies from 01/07/2025 to 31/12/2026. Where goods qualify for the reduction, the business may credit input VAT accordingly. The tax authority requires businesses to cross-reference their product industry codes against the Vietnamese Product Industry Classification System (under Decision 43/2018/ND-TTg) and against Appendix I and II of Decree 174/2025/ND-CP to self-determine the applicable VAT rate for each product in their actual operations. No blanket ruling of 8% or 10% is issued for domestically produced industrial chains.

Tax Sub-department No. 15 of Hanoi provides guidance to Gia Linh Manufacturing and Services Co., Ltd. (TIN 0101873635) on applying the 5% VAT rate to specialized machinery and equipment for livestock (pigs) and poultry (chickens, ducks, poultry egg incubation) farming. Pursuant to Clause 6, Article 19 of Decree No. 181/2025/ND-CP dated 01 July 2025 and Clause 3, Article 9 of VAT Law No. 48/2024/QH15, specialized machinery and equipment for agricultural production (including livestock farming) are subject to 5% VAT, effective 01 July 2025. The confirmed list includes: automatic feed and water dispensers, specialized housing structures, waste treatment equipment, ventilation and cooling systems, egg collection equipment, conveyors, and other specialized machinery. The company is permitted to apply 5% VAT when issuing sales invoices for these items, subject to self-assessment of actual production and business operations against applicable regulations.

The Ministry of Finance provided guidance on VAT treatment of agricultural products dried using machinery. Under Article 5, Clause 1 of VAT Law No. 48/2024/QH15 (as amended by Law No. 149/2025/QH15) and Article 4, Clause 1 of Decree 181/2025/ND-CP, agricultural products that have only undergone normal minimal processing - explicitly including sun-drying and machine-drying - are VAT-exempt when sold by the producer. Machine-drying (solely to reduce moisture, with no additives or flavorings) therefore qualifies as normal minimal processing and is VAT-exempt at the production stage. However, Article 9, Clause 2(d) of the VAT Law imposes a 5% rate on the same category of minimally processed agricultural products when they fall outside the VAT-exempt scope of Article 5, Clause 1 (i.e., sold outside the enterprise/cooperative chain). A 10% rate applies to goods and services not covered by Clauses 1 or 2 of Article 9. Where the degree of processing cannot be determined, the Ministry of Agriculture and Environment is responsible for classification.

The Dong Nai Tax Department responded to two company questions. First, on cash register e-invoices: a business that primarily serves enterprises under contracts and only occasionally has customers who do not want invoices is not required to use cash register-generated e-invoices. Second, on VAT rate for metal door knobs NEWNEO 5881 (HS-equivalent code 259302 - metal locks and hinges): the tax authority directed the company to check the list of goods not eligible for VAT reduction under Decree 174/2025/ND-CP. If the product is not in Annex 1 or Annex 2 of Decree 174/2025/ND-CP, it qualifies for the reduced 8% VAT rate. Businesses must cross-reference their product code against the annexes of Decree 174/2025/ND-CP and Resolution 43/2018/QH14 to determine the correct applicable rate. If product code 259302 is absent from Annexes 1 and 2, the VAT rate is reduced from 10% to 8%.

Son La Tax Department No. 1 clarifies: under Decree 174/2025/ND-CP, a direct-method VAT taxpayer must, when issuing invoices for VAT-reduced goods/services, record the full pre-reduction value in the 'Total amount' column, record the amount after the 20% rate reduction in the 'Total goods/services' line, and note the reduction basis under Resolution 204/2025/QH15. Even where the contract explicitly states the post-reduction price, the invoice must still follow Decree 174/2025/ND-CP's format. The revenue base for VAT calculation is the pre-reduction revenue (must be grossed up), not the post-reduction contract value.

The Ministry of Finance provides guidance on how to record buyer information on invoices when a public non-business unit has both a tax identification number (TIN) and a budget unit code (MQHNS), pursuant to Clause 7, Article 1 of Decree 70/2025/ND-CP dated 20 March 2025 (amending Decree 123/2020/ND-CP on invoices). According to the guidance of the Ho Chi Minh City Tax Department (confirmed by the Ministry of Finance) and Clause 5, Article 10 of Decree 123/2020/ND-CP (as amended by Clause 7, Article 1 of Decree 70/2025/ND-CP): where the buyer is a unit holding both a TIN and a budget unit code, the invoice must record both the TIN and the budget unit code. This is a mandatory requirement, not optional, to ensure accuracy in state budget management. The Ho Chi Minh City Tax Department notifies taxpayers to be aware of and comply with this requirement.

The General Department of Taxation provided guidance on how to record buyer information on e-invoices when individual customers decline to provide personal identification details. The primary legal basis is Clause 7, Article 1 of Decree 70/2025/ND-CP amending Decree 123/2020/ND-CP on invoices and documents. According to the guidance, when individual retail customers purchasing for personal consumption (not for business) refuse to provide information (name, address, tax code, national ID), the seller may leave fields blank or record only the information the customer does provide (e.g., just name and province/city). The tax authority instructs businesses to comply with current regulations and to seek further clarification from their direct managing tax authority.

The Customs authority responded to a metal products manufacturer (pliers, screwdrivers, and other hand tools, 95% exported) regarding the timing of electronic invoice issuance for exports and customs clearance conditions under current regulations. On clearance: goods are cleared after completing customs procedures. If tax has not been fully paid, a credit institution guarantee or tax deferral arrangement is required. Goods subject to specialized inspection are cleared upon receiving an inspection waiver notice or a satisfactory inspection result. The Customs authority reminded the company to refer to specific provisions in the 2014 Customs Law, Decree 08/2015/ND-CP, and Circulars 38/2015/TT-BTC and 39/2018/TT-BTC for proper declaration and import-export tax compliance.

The Ministry of Finance advises that a household business that purchases round logs (pine, eucalyptus, etc.) and saws them into planks or pieces for sale to processing companies is engaged in manufacturing activity, not merely basic primary processing. Therefore the higher manufacturing tax rate applies. Under Articles 4 and 6 of Circular 84/2021/TT-BTC and Decree 359/2025/ND-CP, the applicable rate is 4.5% (3% VAT + 1.5% PIT) rather than the distribution rate of 1.5% (1% VAT + 0.5% PIT). The classification depends on the actual nature of the processing: simple trimming or de-barking may qualify as basic primary processing, but sawing into commercial-dimension planks or pieces constitutes manufacturing.

Decision 1092/QD-BTC issued by the Ministry of Finance on May 13, 2024, announces the results of systematizing all legal normative documents under the Ministry's state management scope for the period 2019-2023. This is an important document that helps businesses, especially small and medium enterprises (SMEs), gain a comprehensive overview of all legal regulations related to taxation, budget, accounting, auditing, pricing, national reserves, and other fields managed by the Ministry of Finance. This systematization clarifies which documents remain valid, which have expired, and which require amendments or supplements, thereby facilitating businesses in consulting and properly complying with current legal regulations. The decision takes effect immediately from the signing date, helping SME owners easily grasp the most updated legal framework for business operations, tax declarations, financial reporting, and other obligations with tax and financial authorities. For SMEs, this decision is significant in ensuring legal compliance and avoiding legal risks arising from incorrectly applying expired documents or missing new regulations. Business owners should monitor the list of documents announced with this decision to stay updated on changes in financial, tax, and accounting policies in a timely manner.

Ho Chi Minh City Tax Department responded to a query about VAT rates for domestic distribution and retail of pet food (HS 23091010) and animal feed raw materials (HS 2301.10.00) imported from South Korea. The question concerns whether these qualify as VAT-exempt "animal feed" under Clause 3, Article 5 of VAT Law No. 48/2024/QH15. However, the HCM Tax Department did not provide specific guidance, instead directing the business to submit a formal written request to their directly managing tax authority for case-specific guidance. The response did not clarify the applicable domestic sales VAT rate. Key point: import VAT (0% with C/O or 5% without C/O) and domestic sales VAT may differ, and the legal distinction between pet food and livestock feed under applicable law requires clarification.

The Da Nang Tax Authority (Sub-department 3) clarified the distinction between the "percentage rate to calculate VAT on revenue" and the standard VAT tax rate applicable to foreign contractors. Under Circular 103/2014/TT-BTC, the percentage rate is a deemed rate used to calculate VAT payable under the direct method (taxable revenue multiplied by the percentage), which differs from standard VAT rates (0%, 5%, 8%, 10%). Circular 103/2014/TT-BTC remains in force and specifies percentage rates by industry: 5% for services, equipment leasing, and insurance; 3% for construction and installation; 2% for transport, manufacturing, and other activities; 1% for distribution and supply of goods. The authority also referenced Circular 40/2021/TT-BTC for related individual business provisions. The foreign contractor tax calculation method using deemed rates on revenue is separate from the standard VAT rate framework under the VAT Law applicable to Vietnamese parties.