Vietnam’s VAT Law in 2026: Rate Changes, Registration Thresholds, and E-Invoice Requirements for Foreign Enterprises

Foreign-invested enterprises (FDI) operating in Vietnam face three critical VAT compliance changes effective July 1, 2025, under Law No. 48/2024/QH15 and Resolution 204/2025/QH15. FDI companies must register for VAT from the first VND of taxable activity with no revenue threshold exemption, comply with a VND 5 million (~USD 200) non-cash payment threshold for input VAT deductions (reduced from VND 20 million), and apply the temporary 8% VAT rate (reduced from 10%) to most goods and services through December 31, 2026. Foreign digital suppliers selling to Vietnamese customers face identical zero-threshold registration requirements regardless of revenue level. These changes directly impact FDI cash flow management, transfer pricing policies, and operational systems. The temporary rate reduction creates working capital benefits for foreign manufacturers, while stricter payment documentation and zero-threshold registration eliminate compliance flexibilities available to domestic household businesses (which receive exemption below VND 200 million annual revenue).

Key Regulatory Changes Summary

Effective July 1, 2025:

• Standard VAT rate: 8% (reduced from 10%) for most goods and services
• Excluded sectors maintaining 10% rate: telecommunications, financial services, insurance, banking, real estate, luxury goods
• 0% VAT rate expansion for export goods and services
• Non-cash payment threshold: VND 5 million (reduced from VND 20 million)

Effective January 1, 2026:

• VAT registration threshold: VND 200 million annually (increased from VND 100 million) for domestic household businesses only
• FDI companies: Zero threshold—must register immediately upon incorporation

Ongoing Compliance (2022-2026):

• Electronic invoicing mandatory since July 1, 2022
• Decree 70/2025/ND-CP updates (effective June 1, 2025): Stricter data fields and POS integration for retail sectors

What is the 0% VAT Rate for Exports?

The 0% VAT rate applies to qualifying export goods and services, enabling businesses to reclaim all input VAT paid during production processes (Law No. 48/2024/QH15, Article 9, effective July 1, 2025). This differs from VAT exemptions, which prohibit input VAT recovery. Eligible export activities include manufactured goods sold to foreign buyers with customs declarations, cross-border services consumed outside Vietnam, and goods sold to Non-Tariff Export Processing Zones (EPZs) or Export Processing Enterprises (EPEs). Exported services generally enjoy 0% VAT, provided they are consumed outside Vietnam. Services consumed within Vietnam (even if paid by foreign entities) are subject to standard VAT. Export businesses must maintain customs declarations, foreign buyer instructions, and proof of overseas consumption to claim 0% VAT treatment (Law 48/2024/QH15 plus Decree 181/2025/ND-CP). Tax authorities verify documentation authenticity through periodic onsite inspections and cross-checking with customs data systems. The cash flow impact proves substantial for qualifying exporters. Manufacturing enterprises previously unable to recover VND input VAT costs can now reclaim these amounts through monthly or quarterly VAT refund procedures, improving working capital by 8-10% of production costs depending on input structure. Foreign-invested manufacturers should coordinate VAT compliance with transfer pricing documentation to ensure consistent treatment across both tax regimes, particularly for on-the-spot export transactions.

How Does On-the-Spot Export VAT Treatment Change?

On-the-spot export transactions where goods are delivered within Vietnam to foreign buyers face stricter 0% VAT eligibility criteria under Law No. 48/2024/QH15. Transactions paid by foreign entities but delivered domestically may be subject to standard 8-10% VAT rates unless involving designated Non-Tariff Export Processing Zones or EPEs. The new framework requires detailed documentation proving foreign buyer instructions and establishing clear chains of custody from manufacturer to final overseas destination. Digital platforms facilitating triangular trade must implement robust tracking systems ensuring complete supply chain visibility for tax authority verification. Tax authorities conduct regular inspections examining documentation integrity and operational procedures for on-the-spot activities. Businesses must maintain detailed records demonstrating genuine export intent, foreign ownership transfer, and overseas consumption to qualify for 0% VAT treatment. Enhanced oversight mechanisms include mandatory electronic reporting and real-time customs integration. Foreign-invested enterprises engaged in on-the-spot transactions should coordinate VAT compliance with transfer pricing documentation requirements to ensure consistent characterization of these transactions. Unlike Singapore’s goods-in-transit provisions, Vietnam requires physical export evidence even for transactions involving foreign buyers.

What are the New VAT Rate Changes?

Vietnam’s standard VAT rate reduces from 10% to 8% for most goods and services during the period July 1, 2025 through December 31, 2026 (Resolution 204/2025/QH15 on VAT reduction). This temporary reduction excludes telecommunications, financial services, insurance, banking, real estate, metal products, and luxury goods, which maintain the 10% rate. Agricultural machinery, fertilizers, and offshore fishing equipment move from VAT-exempt status to the 5% VAT bracket effective July 1, 2025 (Law 48/2024/QH15, Article 9). This change allows businesses purchasing these inputs to deduct associated VAT, reducing production costs for agricultural and fisheries enterprises. The rate reduction creates immediate compliance implications for businesses:

• Cash flow relief: Businesses experience 20% reduction in VAT payment obligations on qualifying sales, improving monthly working capital by the differential amount between collections and remittances.
• Pricing strategy: Companies can maintain current pricing while improving margins, or reduce prices to gain market share while preserving profitability.
• System updates: Accounting software, point-of-sale systems, and e-commerce platforms require configuration changes to apply correct 8% rate starting July 1, 2025.
• Invoice compliance: Businesses must issue invoices showing 8% VAT rate for qualifying goods/services and maintain separate tracking for excluded 10% rate transactions.
• Transfer pricing implications: Foreign-invested manufacturers should evaluate whether temporary rate reductions warrant adjusting transfer pricing policies with parent companies, as reduced Vietnam VAT may impact overall effective tax calculations and cash flow models for multinational groups.

What is the New VAT Registration Threshold?

Businesses with annual revenue exceeding VND 200 million (~USD 8,000) must register for VAT effective January 1, 2026 (Law 48/2024/QH15, Clause 25, Article 5, and Article 18). This threshold applies to domestic household businesses only and doubles from the previous VND 100 million requirement. Critical FDI Distinction: Foreign-invested enterprises (FDI), regardless of corporate structure or revenue level, must register for VAT immediately upon incorporation and commencement of taxable activities. FDI companies have no safe harbor revenue threshold. This zero-threshold requirement also applies to foreign digital suppliers conducting business with Vietnamese customers. Small domestic businesses below the VND 200 million threshold may register voluntarily to claim input VAT recovery and issue VAT invoices to corporate clients. Voluntary registration subjects the business to full VAT compliance requirements including monthly filing obligations and electronic invoicing mandates. The threshold calculation includes all revenue from goods and service sales, excluding VAT-exempt activities such as certain financial services and healthcare. Businesses operating multiple revenue streams must aggregate all qualifying sales when determining threshold applicability. Registration relief impacts small domestic enterprises through reduced administrative burden:

• Filing obligations: Businesses below VND 200 million threshold avoid monthly VAT return preparation and submission requirements.
• Invoice requirements: Non-registered entities use simplified sales documentation instead of government-certified electronic invoices.
• Record-keeping: Small businesses maintain basic accounting records rather than detailed VAT input-output reconciliation systems.
• Professional fees: Reduced accounting and compliance costs from eliminating monthly VAT processing requirements.

Growing domestic enterprises approaching the VND 200 million threshold should evaluate voluntary registration timing strategically. Early registration enables input VAT recovery and demonstrates tax compliance to larger corporate clients but requires investment in accounting systems and compliance procedures.

How Do VAT Refund Procedures Change?

VAT refunds must be submitted through mandatory electronic platforms integrated with government-certified digital invoice systems (Law No. 48/2024/QH15, effective July 1, 2025). The new digital framework accelerates processing from 3-6 months to 4-6 weeks through automated validation and real-time customs cross-checking. Qualifying businesses with excess input VAT positions include export manufacturers with predominantly foreign sales (particularly FDI export-oriented factories), investment-stage companies with large capital expenditures, and enterprises experiencing temporary sales declines creating input-output imbalances. The refund application process requires:

• Electronic submission: Applications filed through government-certified e-invoice platforms with digital signature authentication.
• Documentation requirements: Purchase invoices, customs declarations, bank payment records, and export contracts supporting input VAT claims.
• Non-cash payment verification: Transactions exceeding VND 5 million must show bank transfer evidence; cash payments disqualify associated input VAT recovery.
• Automated risk assessment: Tax authority systems evaluate refund applications against predefined risk criteria, flagging high-risk submissions for enhanced verification.

Processing timelines vary based on risk classification. Low-risk applications with complete documentation receive approval within 30 days, while high-risk cases (including first-time FDI refund applicants or deviations from industry norms) undergo onsite inspections extending processing to 60-90 days. Businesses should maintain comprehensive digital records and ensure payment method compliance to minimize processing delays. Foreign-invested companies with regional treasury centers should coordinate Vietnam VAT refund timing with group cash flow planning, as refund receipts can provide substantial working capital injections during investment phases.

What Is the New 5 Million VND Non-Cash Payment Requirement?

Businesses must use non-cash payment methods (bank transfers, credit cards, electronic payments) for all transactions exceeding VND 5 million (~USD 200) to claim input VAT deductions, effective July 1, 2025 (Law No. 48/2024/QH15). This threshold reduces from the previous VND 20 million requirement. Cash payments exceeding VND 5 million disqualify associated input VAT recovery regardless of proper invoice documentation. This strict prohibition aims to enhance tax administration oversight and reduce cash-based tax evasion. The payment threshold applies to:

• Purchase transactions: Goods and service acquisitions from suppliers, including materials, equipment, professional services, and utilities.
• Expense reimbursements: Employee business expense reimbursements exceeding VND 5 million must use company bank transfers rather than petty cash disbursements.
• Capital expenditures: Asset purchases and facility improvements require bank payment evidence for input VAT recovery.
• Import payments: Customs duty and import VAT payments automatically comply as these use bank transfers through customs systems.

Businesses should revise petty cash policies immediately to ensure compliance. Practical approaches include:

• Lowered cash limits: Reduce petty cash transaction limits to VND 4 million maximum, requiring bank transfers for larger amounts.
• Corporate cards: Issue company credit cards to employees for business expenses exceeding VND 5 million.
• Reimbursement procedures: Require employees to use personal bank transfers for business expenses, then submit bank records with reimbursement requests.
• Supplier coordination: Notify suppliers that cash payments above VND 5 million will no longer be accepted for VAT-applicable purchases.

Foreign companies accustomed to higher cash transaction thresholds in home markets should note Vietnam’s stricter requirements. This aligns with regional anti-money laundering frameworks but imposes tighter operational constraints than jurisdictions like Thailand (THB 100,000/~USD 2,800) or Indonesia (IDR 10 million/~USD 650).

What are Electronic Invoicing Requirements?

Electronic invoicing has been mandatory since July 1, 2022. The 2025-2026 period focuses on complying with Decree 70/2025/ND-CP updates (effective June 1, 2025), which mandate stricter data fields and POS integration for retail sectors. These platforms mandate standardized XML formatting, digital signature authentication, and automated VAT calculation verification. Certified platform providers include government-approved vendors offering compliant e-invoice solutions with General Department of Taxation network integration. Businesses select certified vendors based on pricing, technical support, and accounting software compatibility. Implementation requirements include:

• Technical specifications: XML-formatted invoice data transmission, 256-bit digital signature encryption, and automated VAT calculation validation.
• System integration: Connection between business accounting software and certified e-invoice platform through API interfaces or manual data entry portals.
• Data backup: Duplicate electronic record storage across multiple secure systems with minimum seven-year retention periods and quarterly integrity testing.
• Staff training: Finance team education on e-invoice generation, transmission protocols, and error resolution procedures.
• Decree 70/2025 updates: Retail, F&B, and hospitality sectors must integrate Point-of-Sale systems directly with tax authorities for real-time invoice generation by June 1, 2025. Enhanced data fields include stricter requirements for buyer identification and item descriptions.

Non-compliance with electronic invoicing standards results in automatic input VAT deduction disqualification and administrative penalties ranging from VND 2 million to VND 5 million per violation. Businesses should verify platform compliance with Decree 70/2025 standards to ensure timely adherence. Foreign-invested enterprises with ERP systems (SAP, Oracle, NetSuite) should verify certified platform compatibility with existing software to minimize integration complexity. Unlike some ASEAN countries allowing proprietary e-invoice formats, Vietnam mandates standardized government specifications requiring technical customization.

What are Cross-Border E-Commerce VAT Requirements?

Foreign e-commerce sellers conducting business with Vietnamese customers must register for Vietnamese VAT from the first VND of revenue, with no threshold exemption. This zero-threshold requirement applies to both B2B and B2C digital transactions. Vietnamese digital platform operators must maintain detailed transaction records, verify foreign seller registration status, and remit VAT collections directly to tax authorities for non-resident vendors. Platforms face joint liability for unpaid foreign seller VAT obligations and administrative penalties for non-compliance. Foreign seller compliance obligations include:

• VAT registration: Submission of registration application through authorized Vietnamese tax representative within 30 days of commencing sales to Vietnamese customers.
• Tax representative: Appointment of licensed Vietnamese accounting firm or legal entity authorized to handle tax filings and authority communications.
• Monthly filing: VAT return submission by the 20th day following month end, regardless of revenue fluctuations.
• E-invoice platform: Integration with government-certified electronic invoicing system for Vietnamese customer transactions.
• Bank account: Opening of Vietnamese bank account for VAT remittance and refund receipt purposes.

Non-compliance consequences include platform account suspension, market access restrictions, and financial penalties under Vietnam’s Tax Administration Law (including surcharges on underpaid VAT). Vietnamese platforms must suspend non-compliant foreign seller accounts within 30 days of tax authority notification. Foreign digital service providers (software, streaming, cloud services) should note that Vietnam’s e-commerce VAT requirements apply to B2B and B2C transactions, unlike some jurisdictions limiting requirements to consumer sales. This creates compliance obligations even for enterprise software vendors serving Vietnamese corporate clients.

What is the Implementation Timeline?

Law No. 48/2024/QH15 implementation follows a phased timeline with distinct compliance milestones for different business categories and system requirements. Phase 1: June 1, 2025 – E-Invoice Decree 70 Updates

• Retail, F&B, and hospitality sectors must comply with POS integration requirements
• Enhanced data fields become mandatory
• Timeline clarifications for issuance versus digital signature timestamps

Phase 2: July 1, 2025 – Rate Changes and Payment Threshold

• Standard VAT rate reduction to 8% takes effect
• 0% VAT expansion for export goods and services begins
• VND 5 million non-cash payment threshold applies
• Agricultural input VAT changes commence

Phase 3: January 1, 2026 – Registration Threshold Increase

• VND 200 million VAT registration threshold effective for domestic household businesses
• Small domestic businesses below threshold receive relief from mandatory registration
• Voluntary registration applications accepted
• FDI companies: No change—zero threshold continues

Phase 4: December 31, 2026 – Rate Reduction Expires

• Standard VAT rate returns to 10% for most goods and services
• 8% temporary reduction concludes

Critical preparation steps include:

• Q2 2025: Evaluate certified e-invoice platform options and Decree 70/2025 compliance requirements. Assess accounting software compatibility and develop implementation project plan with internal IT teams or external consultants.
• Q3 2025: Execute vendor contracts for platform integration (if needed). Initiate platform updates to meet Decree 70 standards. Conduct staff training programs on new compliance procedures and updated data fields.
• Q4 2025: Perform parallel testing of updated invoice systems. Resolve technical integration issues. Update internal control procedures for 8% rate application and VND 5 million payment threshold enforcement.
• Q1 2026: Complete system implementation for large enterprises (annual revenue exceeding VND 50 billion). Achieve full operational status with 8% rate processing. Submit compliance certification to tax authorities.
• Q2-Q4 2026: Medium and small enterprises complete platform implementation with extended deadlines based on revenue classification and operational complexity. Monitor for official announcements regarding potential rate extension beyond December 31, 2026.

Foreign-invested companies should coordinate Vietnam implementation timelines with regional parent company reporting calendars to ensure consistent financial data during system transitions. Unlike some countries offering indefinite grandfathering for legacy systems, Vietnam enforces strict compliance deadlines with limited extension options.

Implementation Guidance for Foreign Investors

Law No. 48/2024/QH15 creates both compliance obligations and strategic opportunities for foreign-invested enterprises operating in Vietnam. Businesses should begin implementation planning immediately to ensure system readiness before July 2025 deadlines. Practical next steps include:

• Immediate actions (Q1 2026): Review existing accounting systems and identify required modifications for 8% VAT rate application. Update pricing strategies to reflect temporary rate reductions. Revise petty cash policies to enforce VND 5 million payment threshold. Audit all transactions exceeding VND 5 million to ensure non-cash payment compliance.
• Short-term actions (Q2-Q3 2025): Evaluate certified e-invoice platform options and verify Decree 70/2025 compliance. Execute vendor contracts for platform integration or updates. Coordinate with IT teams to plan system integration timelines. Conduct staff training on new compliance procedures, updated data fields, and VND 5 million threshold documentation requirements.
• Medium-term actions (Q4 2025-Q1 2026): Complete e-invoice platform implementation and parallel testing with Decree 70/2025 standards. Update internal controls and approval workflows for digital compliance. Verify foreign e-commerce VAT obligations if selling to Vietnamese customers. Review transfer pricing documentation to ensure consistency with new VAT treatment for on-the-spot exports.
• Long-term monitoring: Track regulatory updates through official Ministry of Finance announcements and implement any additional Circular guidance. Review compliance effectiveness quarterly and adjust procedures based on operational experience. Monitor potential extension of 8% rate beyond December 31, 2026. Coordinate VAT refund timing with regional treasury centers for optimal cash flow management.
• FDI-Specific Considerations: Foreign enterprises should distinguish their compliance obligations from domestic household business requirements. Zero-threshold registration, transfer pricing coordination, and EPE/Non-Tariff Zone transaction documentation require specialized attention not applicable to domestic SMEs.

Foreign companies should consult qualified Vietnamese tax advisors to evaluate specific business impacts and develop customized implementation strategies aligned with corporate operational structures and regional compliance frameworks.

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Disclaimer: This content provides general information about Vietnam’s VAT Law No. 48/2024/QH15 based on legislative text as of January 2026. Tax regulations are subject to interpretation and implementation guidance through Ministry of Finance Circulars. For specific compliance advice applicable to your business circumstances, consult licensed Vietnamese tax advisors or legal professionals. ICLV does not provide legal opinions on tax law interpretation without specific engagement. Regulatory scope: This guide covers VAT registration, rate changes, electronic invoicing, cross-border e-commerce requirements, and FDI-specific compliance obligations under Law No. 48/2024/QH15. It does NOT address special VAT regimes for oil and gas, real estate transfers, financial services derivatives, or Special Economic Zones, which require separate specialized guidance.

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