VAT Calculation Methods – Choose the Right Option for Your Business!

Value-Added Tax (VAT) is an essential part of financial management for businesses. Choosing the correct VAT calculation method not only ensures compliance with the law but also optimizes costs and mitigates risks. According to the amended Law on Value-Added Tax No. 48/2024/QH15, businesses need to understand the two primary VAT calculation methods to select the one that best suits their business model.

1. Two VAT Calculation Methods

1️⃣ Deduction Method:

• Applicable for: Businesses with annual revenue over 1 billion VND or businesses with revenue below 1 billion VND but meeting full accounting, invoicing, and bookkeeping requirements, and voluntarily registering.
• Advantages: Suitable for large businesses with comprehensive input and output invoices, allowing for cost optimization through input VAT deductions.

2️⃣ Direct Method:

• Applicable for: Small businesses, individual household businesses, or businesses that do not meet the requirements for the deduction method.
• Advantages: Easier to declare and more suitable for simple business models.

2. VAT Calculation Basis

VAT is calculated based on:

• The value of goods and services sold.
• The import value of goods from abroad.
• Specific methods such as leasing assets, installment payments, or deferred payments.

These regulations require businesses to thoroughly understand their operations to apply the correct and precise VAT calculation.

Choosing the right VAT calculation method is a crucial step to help businesses save costs and avoid risks in tax declarations. To ensure compliance with the new tax law, companies must prepare carefully, from updating information to perfecting their tax accounting processes.

If your business needs assistance or detailed advice on the new VAT Law, VAAL is ready to accompany you. With an experienced team of professionals, we will help your business prepare effectively for all changes, ensuring transparency and efficiency in financial management.

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