New Value Added Tax (VAT) Law in Vietnam to take effect from July 1, 2025
- Vinex Official
- Sep 3
- 3 min read
On July 1, 2025, the new Value Added Tax (VAT) Law will officially take effect, replacing the 2008 VAT Law and previous amendments. This is one of the major changes in tax policy in recent times, directly affecting the production and business activities and tax compliance strategies of enterprises.
1. New legal framework
Law No. 48/2024/QH15 and Law No. 90/2025/QH15 have laid the foundation for the current VAT system , creating a solid legal framework for businesses . At the same time, Decree 181/2025/ND-CP issued on July 1, 2025 has provided detailed instructions, creating a legal basis for the application of VAT in the new period.
2. 0% tax rate and regulations on on-site import and export
Exported goods and services : still apply 0% rate if consumed outside Vietnam.
On-the-spot import and export : for the first time, clearly stipulated in the law, allowing goods delivered in Vietnam as designated by foreign traders to be considered as “exports” and enjoy a 0% tax rate. This provision removes the requirement for foreign traders to have a commercial presence in Vietnam.
Bonded warehouses and duty-free zones : transactions can still apply a 0% tax rate, but businesses need to prove that the goods/services are used for export production activities.
3. Changes in 5% and 10% tax rates
Foreign suppliers without a permanent establishment in Vietnam, including e-commerce and digital services, will be subject to a VAT rate of 10% instead of 5% as before.
Goods and services groups are reclassified, leading to changes in determining whether a 5% or 10% tax rate is applied.
Foreign contractors can register to issue VAT invoices in Vietnam, helping domestic customers have a basis for input tax deduction.
4. New compliance threshold of value added tax law
Cashless payment : required for bills from 5 million VND or more (including VAT).
VAT revenue threshold : from 2026, business households and individuals with revenue under 200 million VND/year will not have to pay VAT. This is double the old threshold of 100 million VND/year).
5. Tax refund policy
Investment project : allows tax refund if input tax is from 300 million VND or more during the investment phase, with the deadline for submitting tax refund dossier being 1 year from the completion of the project.
Production and service activities : enterprises producing goods subject to 5% tax can get a tax refund after 12 months or 4 quarters if the undeducted input tax is from 300 million VND.
Excluding tax refund cases : such as change of ownership, merger, separation, tax refund is only maintained when the enterprise is dissolved.
Documentation requirements : additional cargo insurance documents for exports under CIF terms, in addition to the bill of lading and packing list.
6. Challenges in implementing value added tax law
Verification of the seller's payment of output VAT still depends on the tax authority, causing delays in tax refund procedures.
Exporting enterprises need to prepare more complete sets of documents to avoid being denied VAT deduction.
The change in the classification of goods subject to 5% and 10% tax requires accountants to review the invoice and voucher system.
7. Conclusion
The new VAT Law 2025 not only adjusts tax rates, revenue thresholds and tax refund procedures, but also expands the scope of application of the 0% rate to on-site imports and exports. This is an opportunity for businesses to optimize tax costs, but at the same time, it also imposes stricter compliance requirements.
Businesses should:
Review contracts and business activities with foreign elements.
Prepare electronic invoice system according to new standards.
Tax administration planning, especially during the transition period from old to new laws.
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