Vietnam Introduces VAT Reforms

by Mary Swire, Tax-News.com, Hong Kong

05 February 2009

Vietnam’s government has reduced the rate of value-added tax on a number of items, while extending the list of goods and services which are exempt from VAT.

The reform is aimed at reducing costs for enterprises and encouraging greater consumption amidst the current economic downturn.

Currently, the standard rate of VAT in Vietnam is 10%, but many items are subject to the reduced rate of 5%, including medical equipment and fresh food. Under a new law which went into effect on February 1, a number of other items have been included in the reduced rate category, including chemicals and coal, engineering supplies, locally manufactured cars and auto parts, ships and tourist services.

The government has also classified an additional 26 items as VAT exempt, including irrigation and drain services; breeding animals; state-owned houses sold to renters; transferable land use; healthcare; imported planes; airplane engines; machinery and equipment for scientific research; temporary imports and exports and jewellery.

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