Value Added Tax (VAT) On Agricultural – Forestry – Aquatic Products EFFECTIVE FROM 01 JANUARY 2026

From 01 January 2026, the new regulations on Value Added Tax (VAT) applicable to crop products, livestock products, aquatic products, cultivated plants and planted forests will officially take effect under the amended VAT Law. This group of goods has a very broad scope of application and directly affects many trading, import–export, processing and distribution enterprises. At the same time, it is also a group of products that is frequently misunderstood in practice, particularly in relation to invoicing, VAT declaration and input VAT deduction.

1. Legal basis

The following contents are prepared based on:

• Law on Value Added Tax No. 48/2024/QH15
• Law No. 149/2025/QH15 amending and supplementing a number of articles of the Law on VAT
  (amending Law No. 48, effective from 01 July 2025)
• Official effective date: from 01 January 2026
  

👉 A key highlight of Law No. 149/2025/QH15 is that it clearly and comprehensively clarifies the application of VAT to agricultural – forestry – aquatic products, putting an end to the long-standing inconsistent interpretations and practices.

2. Products subject to regulation

The regulated products include:

• Crop products
• Livestock products
• Aquatic products from aquaculture and capture fisheries
• Cultivated plants and planted forests

📌 Important condition:
These products must not be processed into other products or must have only undergone simple preliminary processing, such as:

• Washing, drying, sun-drying
• Sorting and packaging
• Preservation and basic cleaning

3. Importation or direct production stage – NOT SUBJECT TO VAT

3.1. Legal provisions

Pursuant to Clause 1, Article 5 of the Law on VAT (as amended):

Crop products, planted forests, livestock products, and aquatic products from aquaculture or capture fisheries that have not been processed into other products or have only undergone simple preliminary processing
👉 ARE NOT SUBJECT TO VAT

This applies at:

• The importation stage; and
• The stage where organizations or individuals directly produce, cultivate, raise or catch and sell such products.

3.2. VERY IMPORTANT PRACTICAL NOTE

Enterprises must clearly distinguish between “not subject to VAT” and “not required to declare VAT”.

For goods not subject to VAT:

• They MUST STILL be declared in the VAT return
• No output VAT is generated
• Input VAT directly related to these activities is NOT deductible

📌 On the invoice:

• VAT rate: Not subject to VAT
• VAT amount: 0

📌 Treatment of input VAT:

• Not deductible
• Recorded as expenses or capitalized into the cost/original value of assets

4. Trading stage (purchase for resale) – CLEAR DISTINCTION BETWEEN TWO CASES

This is the aspect most clearly clarified by Law No. 149/2025/QH15, helping enterprises avoid long-standing errors in practice.

4.1. Case 1: Enterprises purchase agricultural – forestry – aquatic products for resale and sell to ENTERPRISES or COOPERATIVES

Legal nature

• The goods are still subject to VAT in principle
• However, VAT is not collected at this stage
• The applicable mechanism is:
  👉 NO DECLARATION – NO CALCULATION – NO PAYMENT OF VAT

📌 Invoicing – CORRECT PRESENTATION

• VAT rate stated as: KKTNT
  (abbreviation of “No declaration, calculation and payment of VAT”)
• ❌ Do NOT state “not subject to VAT”, as this would misrepresent the legal nature of the transaction

VAT declaration

• No output VAT arises
• If revenue is generated and an invoice is issued, it is still declared under Item 32a
• Corresponding input VAT IS deductible

👉 This is the point where accountants most frequently make mistakes if the legal nature is not properly understood.

4.2. Case 2: Sale to other entities

Including:

• Individuals
• Household businesses
• Organizations that are not enterprises, cooperatives or cooperative unions

📌 Applicable VAT rate:
👉 5% VAT

📌 Treatment:

• Issue a VAT invoice
• Declare VAT in the normal manner
• Input VAT is deductible if general deduction conditions are satisfied

✅ Conclusion

In summary, from 01 January 2026, the application of VAT to agricultural – forestry – aquatic products is not merely a matter of determining the applicable tax rate. More importantly, enterprises must correctly understand the legal nature of each stage—production, importation or trading—as well as identify the type of purchaser. Misunderstanding the difference between “not subject to VAT” and “no declaration, calculation and payment of VAT” may lead to significant tax risks, particularly during tax inspections, audits and final tax settlements.

Therefore, enterprises should comprehensively review their invoicing, VAT declaration and input VAT deduction procedures for this group of goods to ensure compliance with the new regulations and to minimize tax risks during the implementation of the new VAT policy from 2026 onward.