Important changes to VAT administration

Effective 1 July 2016, several important changes to VAT administration will be put into implementation. These include:

  • More goods are waived from VAT return filing but still VAT-deductible: agricultural produce, livestock, aquatic products that are not yet processed or only crudely processed when sold to corporations or cooperatives. This regulation means that related business entities do not need to file VAT tax returns, yet still can have related VAT input deductible against VAT output.
  • More goods and services are exempted from VAT: services of looking after the elderly, the disabled; exported goods processed from natural resources, minerals that account for at least 51% of the costs of goods sold.
  • More stringent policies for VAT refund: No refund would be available for domestic-oriented businesses (.i.e with no international business). A lot more conditions are set for VAT refund claims from business that make capex expenditures resulting in VAT input deductibles of VND300mil (USD13,480). This is aimed at prompting these businesses to enhance operations management, minimize inventories, improve stock turnover, and helping ease the State Budget’ shortage. This also helps eliminate common situations in VAT administration: a business can have VAT refund this month but have VAT payables the next month; or a business can have a VAT refund claim unresolved while still having to make immediate VAT payments.

More detailed amendments on VAT refund are regulated in the revisions to certain parts of Article 13, the Law on Value Added Tax enacted in 2008 (Law No. 13/2008/QH12).