Export Services VAT in Vietnam: 0% Conditions and Refunds

Value-added tax (VAT) policy for exported services in Vietnam operates across two distinct statutory phases:

• Legacy Framework (effective continuously through June 30, 2025): Governed by the 2008 Law on VAT (as amended) and Circular 219/2013/TT-BTC, granting a 0% rate for services directly provided to overseas entities and consumed outside Vietnam.
• New Statutory Benchmark (effective from July 1, 2025): Governed by the Law on VAT No. 48/2024/QH15 (the VAT Law). Implemented by Decree 181/2025/ND-CP and Circular 69/2025/TT-BTC, which replace Circular 219/2013/TT-BTC. The Law sets the 0% VAT rate for export services consumed outside Vietnamese territory or inside non-tariff zones (Article 9), refunds of input VAT from VND 300 million, and non-cash payment rules for purchases from VND 5 million. For wider context, review our guide to VAT for enterprises in Vietnam.

Tax authorities enforce audits on the actual place of consumption. Tech enterprises cannot rely merely on the foreign registration of the buyer to apply 0% VAT. Where service deliverables benefit end-users or operations inside Vietnam, tax officers will reclassify revenue under the standard 10% VAT rate, issuing retroactive tax assessments and statutory surcharges.

Legal Nature and Core Conditions for 0% VAT on Export Services

The 0% VAT rate serves as an export incentive designed to strengthen Vietnam as an international tech and business process outsourcing (BPO) hub. Unlike non-taxable status, a 0% VAT rating means the transaction remains within the VAT regime at a zero rate. This enables enterprises to credit 100% of input VAT incurred on office leases, IT infrastructure, servers, and software licenses.

Distinguishing Exported Software Services from Domestic Software Production

Many foreign investors conflate domestic software production with cross-border software export services:

• Domestic Software Production: Classified as non-taxable under the VAT Law (Article 5(21)). Invoices are issued without VAT. No output VAT is remitted, but input VAT cannot be credited or refunded; it is capitalized into deductible expenses for Corporate Income Tax (CIT).
• Exported Software Services: Subject to 0% VAT provided deliverables are consumed outside Vietnam. Invoices are issued at 0% VAT, input VAT is 100% creditable, and accumulated input VAT is refundable once the statutory threshold is reached.

Article 5(21) covers software products and software services as defined under the laws on information technology and the digital technology industry. Other IT services, such as general IT consulting or outsourced operations, follow the standard VAT rate, so classify each service line before invoicing.

Where an enterprise generates both export revenue and domestic revenue, accounting teams must segregate input VAT directly tied to export activities. If common overhead inputs cannot be separated and the enterprise also has non-taxable revenue, input VAT is apportioned based on the ratio of taxable revenue over total gross revenue during the tax period (VAT Law, Article 14).

Three Mandatory Documentation Requirements to Prove 0% VAT

To sustain the 0% VAT rate during tax audits, export service providers must keep three records:

1. Foreign Service Agreement: Signed in writing or documented via valid electronic data interchange with the overseas client, detailing service scope, performance location, contract consideration, and cross-border settlement terms.
2. Non-cash International Payment Records: Direct telegraphic transfer (SWIFT) from the foreign client bank account into the enterprise corporate bank account opened at a licensed bank in Vietnam.
3. Electronic VAT Invoices: Issued under Decree 254/2026/ND-CP and Circular 91/2026/TT-BTC (effective July 1, 2026, replacing Decree 123/2020/ND-CP), stating the 0% VAT rate and issued when the service is completed, or when payment is collected if the client pays in advance (Decree 254, Article 9.2).

Without a valid contract or invoice, tax inspectors may disqualify the 0% rate. A service export that misses the non-cash payment condition loses input VAT credit and is not subject to output VAT (Article 28.9 of Decree 181).

Rules for Determining Place of Consumption and 10% Standard Rate Exclusions

Place of consumption forms the primary audit focus for tax officers inspecting foreign service revenues. Under the VAT Law, export services must be consumed outside Vietnamese territory. When service consumption takes place inside Vietnam, the transaction is disqualified from 0% VAT regardless of foreign currency settlement.

Place of consumption is verified by where the foreign client directly utilizes service outputs:

• Software Outsourcing and SaaS: Source code delivered via cloud repositories to offshore counterparties and operated on foreign servers is treated as consumed outside Vietnam (0% VAT).
• BPO Data Processing: Data entry and analysis performed by Vietnamese personnel for foreign markets, with reports utilized abroad, qualify as consumed outside Vietnam (0% VAT).

For services rendered to enterprises within specialized industrial locations, consult our guide on the EPE enterprise VAT regime and non-tariff zone regulations.

Services Rendered to Foreign Clients Excluded from 0% VAT

Executing a contract with an offshore legal entity does not automatically grant 0% VAT. The 0% rate applies only to services consumed outside Vietnam, so services consumed domestically are excluded:

Issuing 0% invoices for services consumed in Vietnam exposes the enterprise to back-taxes at the applicable rate, a 20% penalty for under-declaration, and daily late-payment interest charges (0.03% per day).

From July 1, 2025 through December 31, 2026, IT and advertising services consumed in Vietnam that are otherwise taxed at 10% qualify for the reduced 8% rate under Resolution 204/2025/QH15 and Decree 174/2025/ND-CP (invoices state 8%). Office rental falls under real estate business and stays at 10%; services within financial activities, such as M&A advisory, do not qualify for the reduction either. Due diligence has no code of its own in the excluded list, so its rate follows how each engagement is classified. The 10% rate applies again from January 1, 2027.

International Banking Payment Documentation and Cross-Border Gateway Risks

Bank proof of non-cash payment is what validates 0% VAT and supports refund claims. Funds remitted via SWIFT MT103 telegraphic transfer must meet three tests:

• Matching Remitter Entity: The remitting party on the bank credit advice should match the foreign contracting party specified in the service agreement, unless the contract stipulates a payment delegation.
• Clear Transaction Reference: Bank remittance notes should cite the relevant service contract number or commercial invoice reference.
• Regulated Inward Bank Account: Funds must be deposited directly into the registered business bank account of the Vietnamese company.

Third-Party Payment Compliance Warning: If a foreign client delegates payment to a third party abroad, the delegation must be stipulated in the export contract, an addendum or a contract amendment (Article 27 of Decree 181). Sign it before the funds arrive; a document prepared after receipt invites challenge from tax authorities.

Managing Risks with Stripe, PayPal, and Payoneer Online Gateways

SaaS platforms and cross-border digital providers collecting payments via fintech gateways need three controls:

• Automated Fee Reconciliation: Gateways deduct their own processing fees before crediting funds. Enterprises must archive full transaction logs and fee schedules to prove deductions represent legitimate financial expenses.
• Repatriation to Corporate Account: Revenue collected in virtual wallets must be regularly swept into the corporate bank account in Vietnam. Funds left in a gateway wallet have no bank credit advice, so the evidence for 0% VAT (Article 27.3 of Decree 181) is incomplete.
• Monthly Settlement Audits: Maintain monthly reconciliation sheets matching end-user account identifiers on the payment gateway with inward bank credit slips issued by the domestic bank.

Input VAT Refund Conditions and Procedures from VND 300 Million

A VAT refund frees up cash for technology firms investing heavily in servers, computers, and payroll. The VAT Law sets the refund rules for export goods and services (Article 15).

Under it, business establishments with export goods or services are entitled to cash refunds when export input VAT, after offsetting the VAT payable on domestic sales, remains uncredited at VND 300 million or more in a given month or quarter.

Five rules apply:

• Offset First: Export input VAT is first offset against VAT payable on domestic sales in the same period; only the remainder counts toward the VND 300 million threshold.
• Segregated Input Accounting: Input VAT incurred on equipment, assets, and services utilized for export activities must be tracked separately in accounting ledgers.
• Allocation for Common Overhead: Where input VAT cannot be separated, allocation follows this formula (Article 29 of Decree 181):

• Refund Cap on Export Revenue: The refundable VAT amount cannot exceed 10% of export revenue in the refund period; the excess is carried forward to the next period.
• Non-cash Payment Threshold: Input purchase invoices of VND 5 million or higher must have bank payment vouchers (the VND 5 million threshold is VAT-inclusive). See our analysis on the VND 5 million non-cash payment rule for VAT.

Refund Timelines and the First-Refund Audit Rule

VAT refund dossiers fall into two procedural tracks: Refund first, audit later (decision within 6 working days of the tax authority’s receipt notice) and Audit first, refund later (decision within 10 working days of the conclusion of the on-site inspection), under Article 31 of Decree 252/2026/ND-CP. Time spent on explanations and supplementary documents is excluded.

A first-time refund dossier for each refund case must go to the Audit first, refund later track (Article 30 of Decree 252). If that first dossier does not qualify, the next one still counts as a first refund. Tax auditors review developer timesheets, project deliverables, code deployment records (Git commit logs, Jira tickets), foreign currency bank statements, and supplier invoice authenticity. Review our guide on Vietnam VAT refund compliance for audit readiness.

Conclusion and Strategic Recommendations for Tech and Digital Enterprises

The 0% rate and timely refunds are real cash-flow rights for export-oriented service providers in Vietnam. Under Law on VAT No. 48/2024/QH15, check where each service is consumed, keep clean cross-border banking trails, and segregate input VAT accounts.

To support refund claims and prepare for tax inspections, see our VAT refund service or ask our tax compliance team for CPA-led support.