New Vietnam Valued Added Tax Law from July 1, 2025

On November 26, 2024, the Vietnamese National Assembly passed the Law on Value Added Tax 2024 (replacing the Law on Value Added Tax 2008). This law will take effect from July 1, 2025. Accordingly, many important regulations on VAT will change according to the Law on Value Added Tax 2024, directly affecting enterprises and consumers. In the following article, Viet An Law will update some notable new points in the new Vietnam valued added tax law from July 1, 2025.

Summary of notable new points in the new Vietnam valued added tax law from July 1, 2025

• Adjust goods and services not subject to VAT.
• Amend the regulations on taxable prices for imports.
• Adjust tax rates of certain goods and services.
• Input VAT can only be deducted when paying by bank transfer.
• Raise the threshold of VAT-taxable revenue of business households and individuals.
• Specific instructions for declaring incorrect or incomplete input VAT
• Supplement regulations on VAT refunds.
• Supplement regulations on the taxable price for promotional goods and services.

Adjust goods and services not subject to VAT.

Article 5, Law on Value Added Tax 2024 adjusts the regulations on goods and services not subject to VAT in Article 5, Law on Value Added Tax 2008 as follows:

Omit some goods and services not subject to VAT according to the provisions of the Law on Value Added Tax 2008, including:

• Fertilizers, specialized machinery and equipment for agricultural production, offshore fishing vessels;
• Securities depository, market organization services of the Stock Exchange, or securities trading center, other securities business activities.

Exported goods are resources and minerals that have been mined and processed into other products that are not subject to VAT and must comply with the List prescribed by the Government. Previously, according to Law on Value Added Tax 2008, goods exported for processing, including natural resources, minerals and products of which the total value of natural resources and minerals used, plus costs of energy consumed, for manufacture, accounts for at least 51% of the product cost, are exempt from VAT.

In addition, the amendment clearly defines a number of groups of goods and services to be consistent with specialized laws, avoiding difficulties in implementation such as securities trading, derivative products, defense and security products,…

Amend the regulations on taxable prices for imports

Previously, according to Article 7, Law on Value Added Tax 2008: For imported goods, the taxable price is the border-gate import price plus import tax (if any), excise tax (if any), and environmental protection tax (if any). The border-gate import price shall be determined under regulations on prices for calculating import tax.

New regulations on taxable prices for imports from July 1, 2025, will be implemented according to Article 7, Law on Value Added Tax 2024, specifically:

The amended taxable price for imports is Taxable prices of imports are dutiable value (values on which import duty is charged) as prescribed by regulations of law on export and import duties plus import duty plus extra import duties as prescribed by law (if any), plus excise duty (if any) plus environment protection tax (if any).

This change aims to clarify the components of taxable prices, ensuring consistency with regulations on export and import taxes.

Adjust tax rates of certain goods and services

Article 9, Law on Value Added Tax has adjusted tax rates of certain goods and services, specifically:

Non-taxable products are converted to 5% taxable products

• Fertilizers;
• Fishing vessels at sea.

In addition, supplement the principle of applying tax rates in cases where business establishments trade many types of goods and services with different VAT rates or in cases where agricultural products are used as animal feed or medicinal materials to ensure consistent application and avoid different interpretations.

Products subject to 5% tax rate change to 10%

• Unprocessed forest products;
• Sugar; by-products in sugar production, including molasses, bagasse, and sludge;
• Teaching and learning aids, equipment, and tools exclusively used for teaching, research, and scientific experiments;
• Cultural, exhibition, physical training and sports activities; art performances; film production; film import, distribution and screening.

Add some more goods and services to apply 0% tax rate

• Supplement regulations clearly defining exported goods and services as goods and services directly supplied to organizations and individuals abroad and consumed outside Vietnam; directly supplied to organizations in duty-free zones and consumed in duty-free zones to directly serve export production activities.
• Supplement regulations on digital information content products provided to foreign parties and having records and documents proving consumption outside Vietnam, according to Government regulations are subject to a 0% tax rate.

From July 1, 2025, input VAT can only be deducted when paying by bank transfer

According to Clause 2, Article 14, Law on Value Added Tax 2024, the requirements for deduction of input VAT deduction as follows:

• There are VAT invoices for the purchase of goods and services or documentary evidence of VAT payment during import or documentary evidence of VAT payment on behalf of foreign parties according to Clause 3 and Clause 4 Article 4 of Law on Value Added Tax 2024.
• There is documentary evidence of cashless payment for goods and services purchased, except in special cases specified by the Government;
• For exported goods and services, in addition to the requirements specified in Point a and Point b of this Clause, there must also be a contract with the foreign party for sale, processing of goods, provision of services; invoices for sale of goods, provision of services; documentary evidence of cashless payment; customs declarations for exports; packing list, bill of lading, goods insurance documents (if any).

In the meantime, according to the old regulations in Clause 2, Article 12, Law on Value Added Tax 2008, the requirements for the deduction of input VAT deduction as follows:

• Having an added-value invoice on goods or service purchase or a document proving the payment of value-added tax at the stage of importation;
• Having proof of payment by bank transfer for the purchased goods or services, except goods or services valued at under twenty million Vietnam dong upon each time of purchase;
• For exported goods and services, apart from the above conditions, the business establishment must also have a contract signed with a foreign party on goods sale or processing or service provision, a goods or service sale invoice, a proof of payment by bank transfer, and a customs declaration.

Therefore, if the Law on Value Added Tax 2008 allows tax deductions for transactions under 20 million VND even if paid in cash, Law on Value Added Tax 2024, effective from July 1, 2025, requires “non-cash payment documents” if one wants to deduct input VAT.

In addition, the new regulation has added a number of documents that are deductible for input VAT. According to Clause 2, Article 14, Law on Value Added Tax 2024, for exported goods and services, packing list, bill of lading, goods insurance documents (if any), except for some special cases as prescribed by the Government, input VAT is deductible.

Raise the threshold for VAT-taxable revenue of business households and individuals

According to Clause 25, Article 5, Law on Value Added Tax 2024, goods and services manufactured or sold by business households and individuals that earn annual revenue of at least 200 million VND  are not subject to VAT.

• Regarding the effect, Article 18, Law on Value Added Tax 2024 clearly states that the revenue of households and individuals engaged in production and business activities that are not subject to tax in Clause 25, Article 5 of this Law takes effect from January 1, 2026.
• Currently, according to Circular 40/2021/TT-BTC guiding the 2008 Law on Value Added Tax 2008, business households and individuals with revenue from production and business activities in the calendar year of 100 million VND or more must pay VAT.

Therefore, the Law on Value Added Tax has raised the threshold for VAT taxable revenue of business households and individuals from 100 to 200 million VND. From January 1, 2026, business households and individuals with annual revenue of 200 million VND or more will have to pay VAT.

Specific instructions for declaring incorrect or incomplete input VAT

An important new point that helps enterprises be more proactive in adjusting tax declarations is detailed guidance on incorrect or incomplete input VAT declarations at Point d, Clause 1, Article 14, Law on Value Added Tax 2024:

• In case of incorrect declaration of input VAT of a month/quarter that leads to an increase in VAT payable or a decrease in refundable VAT: Enterprises must declare in the period of occurrence, pay the full amount of additional tax payable or have the corresponding refunded tax amount recovered, and pay late payment fees (if any).
• In case of incorrect declaration of input VAT of a month/quarter that leads to a decrease in VAT payable or only an increase or decrease in refundable VAT being carried forward to the next month/quarter: Enterprises are allowed to declare in the period of discovery.

This regulation is clearer than before, helping businesses avoid legal risks when self-detecting and correcting errors.

Supplement regulations on VAT refunds in Vietnam

To support cash flow for businesses, Article 15, Law on Value Added Tax 2024 has added a new case of tax refund:

• A business establishment that only manufactures products or provides services is subject to 5% VAT.
• Has a residual input VAT of 300 million VND or more for at least 12 consecutive months or 04 consecutive quarters will be eligible for VAT refund.
• This is good news for businesses in this field, helping to reduce financial burdens and promote production and business.

In addition, clear regulations are needed to avoid difficulties in implementing VAT refunds for investment projects; VAT refunds for exported goods and services; and no VAT refunds for investment projects of business establishments in conditional investment and business sectors when they do not meet all business conditions as prescribed by the law on investment or do not ensure that they maintain sufficient business conditions during operation.

Supplement regulations on the taxable price for promotional goods and services

An important new point in Article 7, Law on Value Added Tax 2024, is the supplement of regulations on taxable price for promotional goods and services: VAT on promotional goods and services prescribed by regulations of law on commerce shall be 0 (zero).

This helps businesses reduce their tax burden when running valid promotions.

This is the updated regulation of the new Vietnam valued added tax law from July 1, 2025. If you have any related questions or need tax law advice, please contact Viet An Law for the best advice and support!