Vietnam’s cassava processors urge clear VAT rules on animal feed

Legal framework for VAT on animal feed

The Ministry of Finance clarified VAT rules based on existing laws.

• VAT-exemption: Clause 3, Article 5 of VAT Law No. 48/2024/QH15 exempts animal feed and aquatic feed as defined under relevant laws.
• 5% VAT rate: Point d, Clause 2, Article 9 applies 5% VAT to crop, forest, livestock, and aquaculture products with only simple preliminary processing, unless exempt.
• Clarification on crop products: Clause 5, Article 9 specifies that crop products used for animal feed or medicinal purposes are taxed at the applicable rate, usually 5%.
• Decree guidance: Clause 1, Article 4 of Decree No. 181/2025/NĐ-CP exempts products undergoing simple preliminary processing, such as cleaning, drying, peeling, milling, crushing, cutting, grinding, or roasting, etc.

These provisions highlight the overlap between exempt goods and those taxed at 5%, which has caused confusion among cassava enterprises.

Unified guidance from the Ministry of Finance

To resolve uncertainty, the Ministry of Finance issued unified guidance on VAT application:

• Case 1: Animal feed classification
  If a product, such as dried cassava pulp or dried cassava chips, is identified as animal feed under relevant laws, it is VAT-exempt at all stages.
• Case 2: Preliminary processed agricultural products
  If classified as agricultural products with only simple preliminary processing and used for animal feed or medicinal purposes, they are taxed at the rate for that category, usually 5%.

The Ministry encourages businesses to study the regulations to ensure accurate compliance and avoid tax penalties.