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Law No. 106/2016/QH13, amending the Law on Value Added Tax, the Law on Special Sales Tax and the Law on Tax Management (“Law on Taxes”), was passed by the National Assembly on 6 April 2016.

Accordingly, an enterprise will not be refunded the value added tax (VAT); instead the VAT which has not been deducted will be transferred to the next taxation period in the follwing cases: (i) the investment project has not fully contributed the registered charter capital yet; (ii) the enterprise is in a conditional business line and such conditions have not been satisfied; (iii) the business conditions of the enterprise are not maintained during its operations; (iv) investment projects for the exploitation of natural resources and mining minerals which are licensed from 1 July 2016; (v) investment projects for the manufacture of goods for which the total cost of natural resources, minerals and energy expenses account for 51% or more of the price of the product which is licensed prior to 1 July 2016; (vi) enterprise payings VAT under the tax deduction method if the input VAT amount has not been fully credited during the month or quarter.

Enterprises trading in cultivation, husbandry, aquaculture, seafood and fisheries products which have not been processed into other products, or have only been subject to conventional preliminary treatment, are not required to declare and pay VAT, but they are entitled to deduct input VAT. In addition, the Law on Taxes provides that care services for seniors and disabled people are also VAT non-taxable subjects.

The new regulations on VAT are expected to have a positive impact on enterprises, especially on productive enterprises dealing with unprocessed agricultural and maritime products. Overall, enterprises may be subject to more simple administrative procedures on the declaration, payment and refund of VAT.

This Law on Taxes shall take effect from 1 July 2016.