New regulations from January 2025

?? IFRS Application in Vietnam

On November 29, 2024, the National Assembly has passed amendments to the Accounting Law. These amendments allow both Vietnamese Accounting Standards (VAS) and International Accounting Standards (IAS) to be used in Vietnam. However, the exact effective date is yet to be finalized.

According to Decision No 345/Q?-BTC dated March 16, 2020, the application roadmap is as follows:

1. Objects of Application:

Enterprises with the capability to apply international financial reporting standards (IFRS) or Vietnamese financial reporting standards (VFRS). Training institutions, professional associations, and service providers. State management agencies, including the Ministry of Finance.

2. Plan for IFRS

2.1.?Implementation Plan for IFRS

• Phase 1 (2022-2025): Voluntary application of IFRS for certain enterprises.
• Phase 2 (Post-2025): Mandatory application of IFRS for specific groups based on Phase 1 evaluation.

2.2.?Requirements for Applying IFRS:

• Detailed disclosures on differences between accounting profit and taxable income.
• Compliance with tax regulations.
• Compliance with tax regulations.
• Consistent application of IFRS throughout the fiscal year.
• Ministry of Finance to issue guidelines and publish lists of enterprises applying IFRS

3. Plan for VFRS:

• Preparation Phase (2020-2024): Develop and issue VFRS and related guidance.
• Implementation Phase (from 2025): Apply VFRS to all enterprises, except those using IFRS or micro-enterprise accounting systems.
• Regular updates to align with IFRS changes.

?? VAT rate to 8% in Vietnam from 1 January 2025 to 30 June 2025

RBA Vietnam would like to inform you of the update on new regulations regarding the VAT rate as follows:

Applying a reduction of VAT rate to 8%:

• Regulation: On November 30, 2024, the National Assembly ratified a resolution on the 8th session of the 15th National Assembly. In the resolution, the National Assembly decided to continue reducing the value-added tax (VAT).
• Detail: Continue reducing VAT rate for the groups of goods and services specified in point a, section 1.1, clause 1, article 3 of Resolution No. 43/2022/QH15 of the National Assembly from January 1, 2025 to June 30, 2025 for goods and services currently subject to 10% VAT (to 8%), except for the following goods and services: telecommunication, information technology, financial activities, banking activities, securities, insurance, trading of real estate business, metal, precast metal products, mining products (excluding coal mining), coke mining, refined oil, chemical products, goods and services subject to excise special consumption tax.
• Effective: From January 1, 2025, to June 30, 2025.

??Qualified Domestic Minimum Top-up Tax (QDMTT)

On November 29, 2023, the National Assembly issued Resolution No. 107/2023/QH15 on the application of top-up tax under global anti-base erosion rules. Taxpayers include any constituent entity of an MNE Group with at least 750 million Euros in revenue for 2 out of the last 4 years, except for:

• Governmental entities
• International organizations
• Non-profit organizations
• Pension funds
• Investment funds as ultimate parent entities
• Real estate investment vehicles as ultimate parent entities
• Entities with 85% of asset value owned by excluded entities

Constituent entities in Vietnam must apply QDMTT if their Effective Tax Rate is below 15%. QDMTT is zero if the average GloBE Revenue in Vietnam is below 10 million EUR and the average GloBE profit is below 1 million EUR.

Currently, there is no detailed guidance on top-up tax allocation. A draft Decree exists but is not yet finalized. ?