Supplementary Regulation on VAT Taxable Price for Promotional Goods and Services

According to Article 7 of the 2024 Law on Value-Added Tax (VAT), effective from July 1, 2025, a notable addition has been introduced: The VAT taxable price for goods and services used for promotion is determined as zero if the promotion complies with relevant laws and regulations.

1. New Regulation on VAT Taxable Price

Goods and services used for promotional purposes will not be subject to VAT if:

• The promotion is part of a lawful promotional program,

• It is carried out in accordance with the Law on Commerce,

• The promotion has been properly notified or registered with the relevant market management authorities as required.

Applying a zero VAT taxable value helps reduce tax costs for businesses conducting legitimate promotional activities.

2. Conditions for Application

To apply the 0% VAT rate, enterprises must meet several conditions:

• Have a valid, legitimate promotional program under the Commercial Law,

• Maintain adequate and valid documentation such as promotional invoices, delivery slips, and supporting materials,

• Ensure that the goods/services used for promotion do not exceed the legally allowed limits or proportions.

If any of these conditions are not met, the promotional goods may be subject to VAT as if they were regular goods.

3. Implications for Businesses

Legitimate VAT exemption for promotional goods offers multiple benefits:

• Reduces tax expenses and encourages more promotional efforts,

• Brings transparency to promotional programs, reducing risks of tax evasion via misuse,

• Enhances competitiveness in sectors such as retail, F&B, and e-commerce.

However, misimplementation of promotional programs can result not only in VAT back-taxes but also administrative penalties.

4. Recommendations

Businesses are advised to:

• Review and standardize their promotional processes,

• Ensure proper notification/registration in accordance with the Law on Commerce,

• Maintain complete records to prove the purpose and legality of promotional activities.

Conclusion:

The new VAT exemption policy for promotional goods and services starting July 1, 2025, enables businesses to cut costs and boost sales promotions. However, to benefit from this policy, businesses must fully comply with the Law on Commerce and maintain proper documentation. Any mistake in registration or recordkeeping could lead to tax reassessment and penalties. Therefore, it is essential to proactively review and standardize promotional procedures from now on.

Viet Australia
Viet Australia Auditing Company is an independent auditing organization licensed and established in 2007 in the Socialist Republic of Vietnam.