VI How are the VAT rates for rice assessed according to Official Document 732? How is the VAT deduction method regulated? How is VAT refunds handled for goods and services subject to a 5% VAT rate?
Guidelines on VAT rates for rice assessed according to Official Document 732?
The Tay Ninh Provincial Tax Department received Transfer Slip No. 1461/PC-CT dated December 19, 2025, from the Tax Department regarding the transfer of Official Letter No. 05/2025/LVV dated December 8, 2025, and Official Letter No. 01/2026/LVV dated January 9, 2026, from Viet Golden Rice Production and Trading Joint Stock Company concerning Value Added Tax (VAT).
According to Official Letter 732/TNI-QLDN3 of 2026, Tay Ninh Provincial Tax Department has the following opinion:
Based on Article 5 of the Value Added Tax Law 2024, as amended by point a, clause 1, Article 1 of the amended Value Added Tax Law 2025, the following subjects are exempt from VAT:
Subjects exempt from VAT:
- Products of crops, planted forests, livestock, aquaculture, and fishing that have not been processed into other products or have only undergone basic processing, produced and sold by organizations and individuals themselves, and at the import stage.
Enterprises, cooperatives, and cooperative unions that purchase products of crops, planted forests, livestock, aquaculture, and fishing that have not been processed into other products or have only undergone basic processing and sell them to other enterprises, cooperatives, and cooperative unions are not required to declare or pay value added tax but are entitled to deduct input value added tax.
At the same time, Clause 1, Article 4 of Decree 181/2025/ND-CP, supplemented by Clause 1, Article 1 of Decree 359/2025/ND-CP, stipulates the following regarding goods not subject to VAT:
Tax-exempt objects
Tax-exempt objects are implemented according to the provisions of Article 5 of the Value Added Tax Law. Some cases are specified in detail as follows:
1b. Enterprises, cooperatives, and cooperative unions that purchase unprocessed plant, forest, livestock, aquaculture, or fishery products that have not been processed into other products or have only undergone basic processing and sell them to other enterprises, cooperatives, or cooperative unions are not required to declare, calculate, or pay value added tax, but are entitled to deduct input value added tax.
In which:
- a) Enterprises, cooperatives, and cooperative unions paying value-added tax using the tax deduction method on the sale of unprocessed or only minimally processed agricultural products, planted forests, livestock, aquaculture products, and fishery products to other enterprises, cooperatives, and cooperative unions in the commercial trading stage are not required to declare or pay value-added tax.
- b) In cases where enterprises, cooperatives, and cooperative unions paying value-added tax using the tax deduction method on the sale of unprocessed agricultural products, planted forests, livestock, aquaculture products, and fishery products to entities such as households, individual producers and businesses, and other organizations and individuals, value-added tax must be calculated at the 5% tax rate stipulated in Clause 3, Article 19 of this Decree.
Based on the regulations mentioned above, the Tay Ninh Provincial Tax Department provides guidance on the VAT rate for rice as follows:
– If a company purchases rice from farmers and only processes it into other products such as rice, broken rice, bran, or husks for sale to other businesses, cooperatives, or cooperative unions, it is not required to declare and pay VAT, but input VAT can be deducted according to the provisions of Article 1 of Decree 359/2025/ND-CP.
– If a company sells rice, broken rice, bran, or husks to households or individuals engaged in production and business, it must calculate VAT at a rate of 5%.
– If a company grows, harvests, dries, mills, and polishes its own rice, it is exempt from VAT.
How is the VAT deduction method regulated?
According to Clause 1, Article 11 of the 2024 Value Added Tax Law, the method of VAT deduction is specifically as follows:
– The amount of VAT payable using the deduction method equals the output VAT minus the deductible input VAT;
– The output VAT equals the total VAT of goods and services sold as recorded on the VAT invoice.
– The VAT of goods and services sold as recorded on the VAT invoice equals the taxable price of the taxable goods and services multiplied by the VAT rate of those goods and services.
In cases where the invoice shows the payment price including value-added tax, the output value-added tax is determined by subtracting the taxable value-added tax as stipulated in point k, clause 1, Article 7 of the 2024 Value-Added Tax Law from the payment price;
– The deductible input value-added tax is equal to the total value-added tax recorded on the value-added tax invoices for the purchase of goods and services, the value-added tax payment documents for imported goods, or the tax payment documents for the purchase of services as stipulated in clauses 3 and 4, Article 4 of the 2024 Value-Added Tax Law and meeting the conditions stipulated in Article 14 of the 2024 Value-Added Tax Law.
How is a VAT refund applied to goods and services subject to a 5% VAT rate?
According to Article 31 of Decree 181/2025/ND-CP on VAT refund for goods and services subject to a 5% VAT rate:
Businesses that only produce goods or provide services subject to a 5% VAT rate are entitled to a VAT refund if they have uncredited input VAT of VND 300 million or more after 12 consecutive months or 4 consecutive quarters.
In cases where a business produces goods or provides services subject to multiple value-added tax (VAT) rates, the business must separately account for the input VAT used for the production of goods or services subject to the 5% VAT rate. For input VAT used simultaneously for the production of goods or services subject to the 5% VAT rate and for the production and sale of goods or services subject to other tax rates (including goods subject to the 5% VAT rate in the commercial trading stage), if separate accounting is not possible, the input VAT used for the production of goods or services subject to the 5% VAT rate shall be determined according to the ratio between the revenue from the production of goods or services subject to the 5% VAT rate and the total revenue from taxable goods and services for the refund period.
(The last sentence is incomplete and doesn’t fit in the original text.) The refund period is determined from the VAT tax period under the 5% VAT rate, with the amount of uncredited input VAT continuously remaining unrefunded until the tax period in which the refund request is made. The input VAT used for the production of goods and provision of services subject to the 5% VAT rate (including separately accounted input VAT and input VAT determined according to the above-mentioned ratio) is eligible for a refund of input VAT used for the production of goods and provision of services subject to the 5% VAT rate if, after offsetting against the VAT payable on taxable goods and services (if any), the remaining amount is VND 300 million or more. In this case, the business entity is entitled to a refund of input VAT used for the production of goods and provision of services subject to the 5% VAT rate.
The Ministry of Finance stipulates the method for determining the amount of VAT to be refunded for the production of goods and provision of services subject to the 5% VAT rate.
