Goods Eligible for 2% VAT Reduction until 2026 in Vietnam

According to the proposed regulations, the VAT rate shall continue to be reduced by 2%, applicable to groups of goods and services currently subject to the 10% rate. This policy aims to stimulate consumption, align with the current economic context, thereby supporting citizens and enterprises, and promoting production, business activities, tourism, and domestic consumption. So, which goods are eligible for the 2% VAT reduction until 2026 in Vietnam? Below, Viet An Law Firm provides specific legal guidance on this matter.

Proposal for 2% VAT reduction from 1st July 2025 to 31st December 2026

On 13th May 2025, at the 9th Session, the Minister of Finance, under the authorization of the Prime Minister, presented the Draft Resolution of the National Assembly on the reduction of Value Added Tax (VAT).

Specifically, Article 1 of the Draft Resolution proposes a 2% reduction in the VAT rate, applicable to groups of goods and services currently subject to the 10% rate (thus reduced to 8%), except for certain groups of goods and services, including: telecommunications, financial activities, banking, securities, insurance, real estate business, metal products, mineral products (excluding coal), and goods and services subject to special consumption tax (excluding petrol).

The period of application of the 2% VAT reduction mentioned above shall run from 1st July 2025 until 31st December 2026.

Goods Eligible for 2% VAT reduction until 2026 in Vietnam

The tax reduction policy applies to all items currently subject to the 10% VAT rate, except for the following groups of goods and services: telecommunications, financial activities, banking, securities, insurance, real estate business, metal products, mineral products (excluding coal), and goods and services subject to special consumption tax (excluding petrol).

Specifically, under the new provisions of the Law on Value Added Tax 2024, from 01 July 2025, the 10% VAT rate shall apply to certain goods and services.

Clause 3 Article 9 of the Law on Value Added Tax 2024 provides that the 10% VAT rate shall apply to goods and services not mentioned in Clauses 1 and 2 of this Article. In particular, this includes services provided by foreign suppliers without a permanent establishment in Vietnam to organizations or individuals in Vietnam via digital platforms or e-commerce channels.

Accordingly, Clauses 1 and 2 of Article 9 of the Law on Value Added Tax 2024 stipulate as follows:

 (1) 0% VAT shall apply to the following goods and services:

• Exports including: goods from Vietnam sold to overseas organizations and individuals and consumed outside of Vietnam; goods from the domestic market of Vietnam being sold to organizations in free trade zones and consumed within free trade zones to serve export manufacturing; goods sold within airside zones of airports for individuals (foreigners or Vietnamese people) who have completed exit procedures; goods sold at duty-free stores.
• Export services, including: services directly provided for overseas organizations and individuals and used outside of Vietnam; services directly provided for organizations in free trade zones and used within free trade zones to serve export manufacturing.
• Other goods and services for export including: international transport, rental of vehicles for use outside of Vietnam’s territory; aviation services and maritime services provided directly or via agents for international transport; construction and installation of works in foreign countries or free trade zones; digital content products provided for foreign parties with documentary evidence that they are used outside of Vietnam as per regulations of the Government; spare parts for repair and maintenance of vehicles, machinery and equipment for foreign parties and consumption outside of Vietnam; processed goods for export as per regulations of law; goods and services not subject to VAT upon export, except for the cases in which 0% VAT applies specified in Point d of this Clause;
• 0% VAT shall not apply in the following cases: technology transfer, transfer of intellectual property rights to abroad; issuing reinsurance policies in foreign countries; credit extension services; capital transfer; derivatives; postal and telecommunications services; exports specified in Clause 23 Article 5 of this Law; tobacco and alcohol that are imported and then exported; oil and gas purchased in Vietnam and sold to business establishments in free trade zones; automobiles sold to organizations and individuals in free trade zones.

 (2) 5% VAT shall apply to the following goods and services:

• Clean water for production and daily life, excluding bottled water and other beverages.
• Fertilizers; ores for fertilizer production, plant protection chemicals, and animal growth stimulators as prescribed by law.
• Services include digging, embanking, and dredging canals, ditches, ponds, and lakes for agricultural production; growing, tending, and preventing pests and insects for plants; preparing, processing, and preserving agricultural products.
• Medical devices prescribed by regulations of law on management of medical devices; preventive and curative medicines; active pharmaceutical ingredients and herbal ingredients that are materials for production of curative and preventive medicines.
• Teaching and learning equipment, including: models, pictures, boards, chalks, rulers, and compasses.
• Traditional art performances;
• Children’s toys; books except for those specified in Clause 15 Article 5 of this Law.
• Science and technology services prescribed by the Law on Science and Technology 2013.

Thus, except for goods and services subject to the 0% and 5% VAT rates, and certain groups of goods and services including: telecommunications, financial activities, banking, securities, insurance, real estate business, metal products, mineral products (excluding coal), and goods and services subject to special consumption tax (excluding petrol), all remaining goods and services shall be eligible for the 2% VAT reduction until 2026.

List of goods and services eligible for 2% VAT reduction in Vietnam

At present, the list of goods and services eligible for the 2% VAT reduction is proposed to be promulgated and has not yet been specifically issued.

However, reference can be made to Decree No. 180/2024/ND-CP, regulating the reduction of VAT from 10% to 8%, based on Resolution No. 174/2024/QH15.

Pursuant to Clause 1 Article 1 of Decree No. 180/2024/ND-CP, the tax reduction policy applies to all goods currently subject to the 10% VAT rate, except for the groups of products and services listed in the annexes to Decree No. 180/2024/ND-CP, including:

• Goods and services subject to special consumption tax (as detailed in Annex II): items such as alcohol, beer, petrol, motorcycles with cylinder capacity over 125 cm³, yachts, aircraft, cigarettes, discotheque business, lotteries, karaoke…
• Information technology products (Annex III): devices such as computers, mobile phones, tablets, smartwatches, vending machines, ATMs, printers, television cameras…
• Other groups of goods and services not eligible for VAT reduction (Annex I): including telecommunications, insurance, securities, banking, real estate, metal products, chemicals, minerals, etc.
• The reduction of VAT from 10% to 8% under Decree No. 180/2024/ND-CP shall be implemented uniformly from importation, production, and processing to commercial business.

Currently, to search for items eligible for the VAT reduction from 10% to 8% under Decree No. 180/2024/ND-CP, one may do so via one of the following three methods:

• Search by HS Code;
• Search by business line code;
• Search by name of goods or services.

The above is our legal guidance on goods eligible for 2% vat reduction until 2026 in Vietnam? Should you have any questions or require legal advice regarding tax laws, please contact Viet An Law – Tax Agent for the best support.