As Vietnam continues to streamline its tax policies to align with international standards and digital transformation goals, significant changes to the Law on Value-Added Tax (VAT) will officially take effect from July 1, 2025. These amendments are expected to have wide-reaching implications for both local businesses and foreign investors operating in the country. From changes in VAT refund procedures to new rules on taxable activities, the updated law introduces several key provisions aimed at improving transparency, simplifying compliance, and enhancing tax administration efficiency.
In this article, we break down the most important updates to Vietnam’s VAT Law in 2025 and what they mean for your business.
1. Adjustment to VAT-Exempt Goods and Services
The new VAT Law (2024), effective from July 1, 2025, introduces significant changes to Article 5 of the current VAT Law No. 13/2008/QH12 (as amended by Laws No. 31/2013/QH13 and No. 106/2016/QH13), particularly concerning goods and services not subject to VAT. These revisions aim to streamline tax exemptions and align them with current economic realities.
| Category | Previous Regulations | New Regulations |
|---|---|---|
| Certain goods and services | Exempt from VAT: fertilizers; specialized machinery and equipment for agricultural production; offshore fishing vessels; securities depository services; stock exchange market services; other securities-related services. | These categories are no longer exempt from VAT under the new law. |
| Exported goods made from natural resources and minerals | Not subject to VAT if the total value of natural resources and energy costs accounted for 51% or more of product cost. | Now, only items listed in a Government-issued list of processed mineral products are VAT-exempt. |
| Imported donations for disaster relief | Not clearly defined. | Newly added to the VAT-exempt list: imported goods donated for disaster, epidemic, or war relief as prescribed by the Government. |
2. Revised VAT Taxable Price for Imported Goods
Under the new VAT Law 2024, effective from July 1, 2025, the method for calculating VAT on imported goods has been updated. Instead of using the import price at the border gate, the taxable price will now be based on the customs valuation determined under the Law on Export and Import Duties, plus applicable taxes.
Specifically, the VAT taxable price will include:
- The customs value,
- Import duties,
- Additional import-related taxes (if any),
- Special consumption tax (if applicable),
- Environmental protection tax (if applicable).
This change ensures consistency with customs regulations and may affect the final VAT amount payable on imported goods.
3. Clearer Guidelines on Amending Input VAT Declarations
Under the previous VAT Law (2008), if a taxpayer discovered errors or omissions in their input VAT declaration or deduction, they were only allowed to make adjustments before the tax authority issued a decision on inspection or audit at the taxpayer’s premises.
The 2024 VAT Law (Article 14.1, point đ) now provides more specific instructions for handling such errors. Businesses may amend their VAT declarations before the tax inspection or audit decision is announced, as follows:
- If the correction results in more tax payable or reduces refundable tax, the business must declare the adjustment in the tax period where the transaction occurred, pay the additional VAT and any late payment interest (if applicable), or return the over-refunded amount.
- If the correction results in less tax payable, or only affects the amount of deductible input VAT carried forward, the adjustment can be declared in the tax period when the error is discovered.
These clearer rules aim to improve transparency and consistency in handling input VAT errors and reduce disputes during tax audits.
4. Adjustments to VAT Rates for Certain Goods and Services
Article 9 of the 2024 VAT Law introduces changes to the VAT rates applied to various goods and services. These adjustments aim to align tax policy with international practices and reflect evolving market conditions.
4.1. New Items Eligible for 0% VAT Rate
The following goods and services are now subject to the 0% VAT rate:
- International transportation services;
- Construction and installation projects performed abroad or in non-tariff zones;
- Goods sold in isolated areas (e.g. international terminals) to individuals who have completed exit procedures, and goods sold in duty-free shops;
- Exported services, including:
- Rental of transportation vehicles used outside Vietnam;
- Aviation and maritime services provided directly (or via agents) for international transportation.
4.2. From VAT-Exempt to 5% VAT Rate
The following items, previously VAT-exempt, are now subject to a 5% VAT rate:
- Fertilizers;
- Fishing vessels operating in offshore waters.
4.3. From 5% to 10% VAT Rate
Several items previously taxed at 5% are now subject to the standard 10% VAT rate:
- Cultural, exhibition, sports and fitness activities; performing arts; film production, importation, distribution, and screening.
- Unprocessed forest products;
- Sugar and its by-products, including molasses, bagasse, and filter mud;
- Specialized equipment and tools for teaching, research, and scientific experiments;
5. Changes to Input VAT Deduction Conditions
5.1. Non-cash Payment Required for All Purchases
Previously, businesses were allowed to deduct input VAT on goods and services valued under VND 20 million without non-cash payment proof.
Under the new law, all purchases must have non-cash payment documents to qualify for VAT deduction – except for special cases regulated by the Government.
5.2. New Deductible Documents for Exports
According to the new law, packing lists, bills of lading, and cargo insurance documents (if any) related to exported goods and services are now recognized as valid for input VAT deduction.
This is a new provision that was not covered under previous regulations.
6. New Case Eligible for VAT Refund
Under Article 14 of the 2024 VAT Law, businesses that only produce goods or provide services subject to the 5% VAT rate are now eligible for a VAT refund if their unused input VAT reaches at least VND 300 million over a period of 12 months or 4 quarters.
7. Higher Revenue Threshold for VAT on Household and Individual Businesses
Article 5.25 of the 2024 VAT Law raises the annual revenue threshold for household and individual businesses to qualify for VAT exemption from 100.000.000 VND to 200.000.000 VND.
This new threshold will take effect from January 1, 2026.
Currently, under Circular 40/2021/TT-BTC, individuals with annual revenue of VND 100 million or more are subject to VAT. The new law effectively doubles the threshold, reducing the tax burden for small businesses.
The 2025 amendments to Vietnam’s VAT Law mark a significant shift in tax policy, aiming to improve clarity, enhance compliance, and support economic development. Key changes include revised VAT rates, stricter input tax deduction conditions, clearer refund rules, and a higher tax threshold for small businesses.
As these changes take effect starting July 1, 2025 (with some provisions from January 1, 2026), businesses should review their operations, update internal processes, and seek professional advice to ensure full compliance with the new regulations.
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– Nguyen Huong Huyen-