Vietnam new VAT law 2025: Key changes and compliance

Key takeaways

• Law No. 90/2025/QH15 takes effect July 1, 2025, modernizing Vietnam’s VAT system with mandatory electronic processing.
• Standard VAT rate reduces from 10% to 8% for most goods and services during 2025-2026 period.
• VAT registration threshold doubles from 100 million to 200 million VND annually for small enterprises.
• New 0% VAT rate for exporters enables full input VAT recovery, improving cash flow and competitiveness.
• All businesses must use government-certified electronic invoicing platforms with real-time tax authority integration by 2026.

Vietnam’s VAT Law No. 90/2025/QH15 represents the most extensive tax reform in decades, fundamentally restructuring how businesses calculate, collect, and remit value-added tax across all sectors. The legislation introduces temporary rate reductions, expands digital service coverage, and establishes new compliance frameworks for e-commerce platforms, while simultaneously creating opportunities for enhanced input tax recovery and streamlined refund processes. These changes will substantially impact cash flow management, operational procedures, and strategic planning for both domestic enterprises and foreign companies operating within Vietnamese markets.

Overview of the 0-Percent VAT rate: Broadened application and implications

How does Vietnam’s restructured VAT framework create unprecedented opportunities for businesses engaged in international trade? The expanded 0-percent VAT rate under Law No. 90/2025/QH15, effective July 1, 2025, fundamentally transforms the competitive landscape for exporters and cross-border service providers. Unlike VAT exemptions, which prohibit input VAT recovery, the 0-percent rate enables businesses to reclaim all input VAT paid during production processes, creating substantial cash flow advantages and cost reduction opportunities.

Eligibility Standards have broadened substantially to encompass traditional export goods, expanded export services, and revolutionary on-the-spot export transactions. Qualifying businesses must meet specific documentation requirements, including customs declarations, foreign buyer instructions, and proof of overseas consumption for services.

The Revenue Impact proves substantial, as businesses can recover previously non-deductible VAT costs while maintaining competitive pricing structures. This enhanced framework positions Vietnamese exporters advantageously in global markets through improved profit margins and operational efficiency gains.

On-the-spot Import and Export activities: Updated VAT treatment approach

Vietnam’s new on-the-spot import and export rules are the biggest change in the 2025 VAT law, creating new ways for triangular trade and online international sales. These provisions enable foreign buyers to purchase Vietnamese goods through domestic intermediaries while maintaining zero-percent VAT eligibility, fundamentally restructuring traditional cross-border commerce protocols.

The new framework requires detailed documentation proving foreign buyer instructions, establishing clear chains of custody from manufacturer to final overseas destination. Digital platforms facilitating these transactions must implement robust tracking systems, ensuring complete visibility throughout the supply chain for regulatory compliance purposes.

Tax authorities will conduct regular onsite inspections to verify transaction authenticity, examining documentation integrity and operational procedures. Enhanced transaction oversight mechanisms include mandatory electronic reporting, real-time customs integration, and automated compliance monitoring systems. Businesses engaging in on-the-spot activities must maintain detailed records demonstrating genuine export intent, foreign ownership transfer, and overseas consumption, creating accountability standards that protect revenue integrity while enabling legitimate international trade facilitation.

VAT Rate Changes: Temporary cuts and sector adjustments

The sweeping VAT rate restructuring under Law No. 90/2025/QH15 introduces temporary rate reductions alongside permanent sectoral adjustments, creating a dual-tiered system that prioritizes economic stimulus while maintaining revenue stability through selective exemptions. The standard VAT rate drops from 10% to 8% for most goods and services during 2025-2026, representing a significant fiscal policy intervention designed to combat inflation effects and stimulate domestic consumption.

This temporary reduction excludes telecommunications, financial services, insurance, banking, real estate, and luxury goods, which maintain the standard 10% rate. Agricultural machinery, fertilizers, offshore fishing equipment, and securities transactions receive permanent exemptions, supporting strategic economic sectors while addressing inflation effects on essential commodities.

• Cash flow relief: Businesses experience immediate 20% reduction in VAT obligations
• Competitive pricing: Lower VAT enables more aggressive market positioning strategies
• Investment acceleration: Reduced costs encourage expansion and modernization projects
• Consumer benefits: Price reductions translate directly to household savings
• Economic stimulus: Increased purchasing power drives demand across multiple sectors

VAT registration threshold changes for Small enterprises

Small enterprise relief emerges as a cornerstone of Vietnam’s 2025 VAT reforms, with Law No. 90/2025/QH15 doubling the mandatory registration threshold from 100 million to 200 million VND annually, effectively removing thousands of micro-businesses from compulsory VAT compliance while preserving voluntary registration options for strategic business planning.

These SME Incentives substantially reduce administrative burdens for qualifying enterprises, eliminating monthly VAT return filing requirements, invoice compliance obligations, and complex record-keeping procedures that previously consumed substantial operational resources. Small businesses now allocate reduced time and financial resources toward compliance activities, enabling greater focus on core business development and market expansion initiatives.

The Threshold Impacts extend beyond immediate compliance relief, creating strategic decision points for growing enterprises approaching the 200 million VND benchmark. Businesses must evaluate voluntary registration benefits, including input VAT recovery opportunities and enhanced credibility with larger corporate clients, against simplified reporting obligations available below the threshold, requiring careful financial analysis and forward-looking revenue projections.

VAT refund mechanisms: Digital procedures

Digital refund procedures represent a fundamental restructuring of Vietnam’s VAT recovery system under Law No. 90/2025/QH15, establishing mandatory electronic submission protocols that eliminate traditional paper-based applications while introducing real-time processing capabilities designed to accelerate cash flow for businesses with legitimate excess input VAT positions.

The enhanced digital framework incorporates robust security measures, including multi-factor authentication and blockchain verification systems, ensuring transaction integrity throughout the refund process. Refund policies now mandate electronic invoice verification and non-cash payment documentation, creating an integrated audit trail that reduces processing delays from months to weeks.

• Automated validation eliminates bureaucratic delays that previously trapped business capital for extended periods
• Real-time tracking provides transparency, reducing anxiety about refund status and timing
• Enhanced security protocols protect sensitive financial data from cyber threats and fraud
• Streamlined documentation requirements reduce administrative burden on overstretched finance teams
• Accelerated processing timelines improve working capital management for cash-constrained enterprises

Digital Invoice & E-compliance standards

Extensive electronic invoicing mandates under Vietnam’s 2025 VAT legislation establish unprecedented compliance requirements that fundamentally transform how businesses document transactions, requiring universal adoption of government-certified digital invoice systems that integrate directly with tax authority databases for real-time verification and audit capabilities.

All businesses must implement certified electronic invoice platforms featuring standardized interface design protocols that guarantee seamless data transmission between commercial software systems and Vietnam’s General Department of Taxation networks. These platforms mandate specific technical specifications, including XML formatting standards, digital signature authentication, and automated VAT calculation verification processes that eliminate manual invoice preparation methods.

Comprehensive backup procedures become legally mandatory, requiring businesses to maintain duplicate electronic records across multiple secure storage systems, guaranteeing continuous accessibility during system maintenance or technical failures. Companies must establish redundant data preservation protocols spanning minimum seven-year retention periods, with quarterly backup integrity testing requirements. Non-compliance with digital invoice standards results in automatic VAT deduction disqualification and potential penalty assessments.

Cross-border E-commerce VAT: platform requirements and rules for foreign sellers

As multinational commerce increasingly shifts toward digital platforms, Vietnam’s 2025 VAT legislation introduces detailed regulatory frameworks that impose specific compliance obligations on foreign e-commerce operators, domestic platform intermediaries, and cross-border service providers conducting business within Vietnamese territory.

Platform Enforcement mechanisms require Vietnamese digital intermediaries to maintain detailed transaction records, verify foreign seller registration status, and remit VAT collections directly to tax authorities on behalf of non-resident vendors. Foreign sellers exceeding specified revenue thresholds must establish local tax representation, register for Vietnamese VAT purposes, and comply with mandatory electronic invoicing requirements through approved digital systems.

Foreign Compliance obligations extend beyond traditional registration requirements, encompassing real-time reporting protocols, customer identity verification procedures, and coordination with Vietnamese customs authorities for import-related transactions.

• Revenue thresholds trigger immediate compliance obligations without grace periods
• Non-compliance results in platform suspension and financial penalties
• Foreign sellers lose market access without proper VAT registration
• Vietnamese customers face transaction restrictions on non-compliant platforms
• Platform operators become jointly liable for unpaid foreign seller VAT obligations

Implementation timeline and business transition approaches

Beginning July 1, 2025, Vietnamese enterprises must navigate a thorough 18-month shift period that encompasses mandatory system upgrades, staff retraining programs, and sequential compliance milestone achievements to guarantee full adherence to Law No. 90/2025/QH15 and Law No. 48/2024/QH15 requirements.

The phased rollout strategy divides implementation into distinct phases, with large corporations completing digital invoice integration by September 2025, while small enterprises receive extended deadlines through December 2026. Critical adaptation tactics include establishing dedicated VAT compliance teams, implementing enterprise resource planning system modifications, and conducting quarterly internal audits to verify ongoing regulatory alignment.

Conclusion

Vietnam’s VAT Law No. 90/2025/QH15, which fundamentally reshapes compliance obligations and business operations across all sectors, represents a significant milestone in the country’s tax landscape. The extensive reforms, encompassing rate reductions, digital service taxation, enhanced refund mechanisms, and mandatory electronic invoicing systems, position Vietnam’s economy for sustainable growth while modernizing tax administration. Businesses must proactively adapt their systems, processes, and strategies to capitalize on these transformative regulatory changes by July 2025.