Vietnam’s VAT rates for 2026 at a glance:
| VAT rate | What it covers | Period |
|---|---|---|
| 0% | Qualifying export goods and services, on-spot exported goods, and goods and services supplied to EPEs for export manufacturing | Ongoing |
| 5% | Fertilizers, specialized agricultural machinery and fishing vessels operating at sea (moved from exempt), plus other 5% goods and services | Ongoing |
| 8% (temporary) | Goods and services under the VAT Law other than the excluded groups, at a reduced rate of 8% instead of the standard 10% | July 1, 2025 to December 31, 2026 |
| 10% | Standard rate, including telecommunications, finance, banking, securities, insurance, real estate, rolled steel sections and metal casting services, mining products other than coal, and excise goods other than petrol | Ongoing; applies to all taxable items from January 1, 2027 unless the reduction is extended |
| Not subject to VAT | Non-taxable supplies such as domestic software; input VAT cannot be recovered | Ongoing |
Vietnam’s updated value-added tax framework under Law No. 48/2024/QH15, effective July 1, 2025, sets the compliance baseline for foreign-invested enterprises (FIEs). It is part of our Vietnam tax system and accounting regulations guide. Implemented through Decree 181/2025/ND-CP and Circular 69/2025/TT-BTC (formally superseding legacy Circular 219/2013/TT-BTC), the law affects corporate cash flow, accounting workflows, and cross-border supply chains.
The law brings four operational changes: the formal extension of the 8% VAT rate through December 31, 2026 (Resolution 204/2025/QH15 and Decree 174/2025/ND-CP), a 75% reduction in the non-cash payment threshold from VND 20 million to VND 5 million, the reclassification of agricultural inputs from exempt to 5% VAT, and VAT refund criteria tied to full contribution of registered charter capital at filing. For the mechanics (calculation method, input and output VAT, deduction conditions, refund channels), see our guide to Vietnam VAT for FDI.
VAT Rate Changes: 8% Extension and Sector Exclusions
Under Resolution 204/2025/QH15 and Decree 174/2025/ND-CP, the Vietnamese government has extended the 2% VAT rate reduction, applying a reduced rate of 8% instead of the standard 10% from July 1, 2025 through December 31, 2026 for goods and services covered by the VAT Law, except the groups excluded under the Resolution. While this policy provides substantial working capital relief for manufacturing and consumer commerce, the excluded groups (telecommunications, finance, banking, securities, insurance, real estate, rolled steel sections and metal casting services, mining products other than coal, and excise goods other than petrol) remain at the standard 10% rate.
Sectors Maintaining 10%
| Sector | VAT Rate | Scope and FDI Compliance Impact |
|---|---|---|
| Telecommunications | 10% | Network infrastructure and telecom carriers (telecom services are not eligible for 0% when exported). Software is a separate case: non-taxable domestically and 0% when exported |
| Financial Services & Fintech | 10% | Payment gateways, financial intermediation, and investment advisory |
| Banking & Securities | 10% | Securities brokerage, custodial services, and non-credit financial operations |
| Insurance | 10% | Industrial property, marine cargo, and casualty insurance coverage |
| Real Estate Business | 10% | Industrial park land subleasing, ready-built factory leasing, and asset management |
| Metals & Mining Products | 10% | Rolled steel sections, metal casting services and raw mineral extraction (excluding coal); fabricated metal products outside group 24 are not on the list |
| Special Consumption Tax Items | 10% | Automobiles, alcoholic beverages, tobacco, and luxury entertainment venues |
Dual-activity FDI companies (such as an electronics manufacturer at 8% that also subleases surplus factory space at 10%) must strictly segregate revenue and output VAT by rate within their accounting records. Under the VAT Law, a business that fails to separate its revenue by rate must calculate and pay VAT at the highest rate that applies to its goods and services (10%).
Input VAT Allocation for Mixed Activities
Where common overhead costs cannot be directly segregated between taxable and non-taxable operations, the VAT Law mandates proportional allocation based on revenue:
This ratio is declared on monthly or quarterly VAT returns.
Reclassification of Exempt Items to 5% VAT (Article 9.2)
A structural breakthrough in the VAT Law is the removal of fertilizers, specialized agricultural machinery, and fishing vessels operating at sea from the non-taxable (exempt) schedule to the 5% VAT bracket.
Under legacy regulations, classification as VAT-exempt heavily penalized industrial producers because input VAT paid on factory construction, machinery, electricity, and raw materials could not be deducted or refunded (accumulating as dead overhead). The 5% rate allows input VAT incurred from July 1, 2025 to be deducted, and producers of 5% goods can claim a cash refund once uncredited input VAT reaches VND 300 million after 12 months or 4 quarters (Article 15 of the VAT Law, Article 31 of Decree 181).
Statutory Comparison: Old vs. New VAT Framework
| Regulatory Metric | Legacy Rule (Circular 219/2013/TT-BTC) | New Benchmark (Law 48/2024 & Decree 181/2025) | Compliance Imperative for FDI |
|---|---|---|---|
| Non-Cash Payment Floor | Invoices ≥ VND 20,000,000 | Invoices ≥ VND 5,000,000 (gross invoice) | Eliminate cash payments for all procurement from VND 5M |
| Agricultural Inputs & Fertilizer | Non-taxable (VAT-exempt) | Taxable at 5% VAT | Declare input deductions from July 1, 2025; file for refunds where Article 15 is met |
| Standard Rate Relief | Ad-hoc short extensions | Extended to Dec 31, 2026 (Res. 204/2025) | Configure dual-rate tax codes in ERP software |
| Investment Project Refund | Flexible; loosely tied to capital | Min. VND 300M; Full registered charter capital contributed at filing | Fully inject registered charter capital prior to filing |
| Restructuring Refunds | Permitted for mergers, splits, transfers | No separate rule; the refund provision covers dissolution and bankruptcy | Confirm with the tax authority how input VAT balances carry over before restructuring |
| 5% Goods and Services | Refund without minimum accumulation | Min. VND 300M uncredited after 12 months or 4 quarters | Submit quarterly or annual cash refund filings |
0% VAT for Exports and On-Spot Transactions
The 0% VAT rate applies to qualifying export goods and services, allowing FDI enterprises to deduct input VAT. Conditions and documents are covered in VAT on export services. Refunds remain subject to the conditions of the VAT Law (for exports, uncredited input VAT of at least VND 300 million and a refund capped at 10% of export revenue). The 0% rate differs fundamentally from VAT exemption, which bars input tax recovery.
Qualifying exported goods require valid sales contracts with foreign buyers, customs clearance declarations, and international non-cash bank payment vouchers. For export services, the mandatory prerequisite is that services must be supplied to and consumed outside Vietnamese territory. Services consumed within Vietnam remain subject to standard domestic rates, irrespective of whether payments originate from foreign accounts.
On-Spot Export: Redefined Under Law 90/2025/QH15
On-spot export transactions are addressed in Law 90/2025/QH15:
- On-spot exported goods: Law 90/2025/QH15 adds on-spot exported goods to the 0% group; detailed conditions follow the Ministry of Finance’s guiding documents.
- Supplies to Export Processing Enterprises (EPEs): Goods and services supplied to EPEs qualify for 0% VAT only when directly serving export manufacturing activities. See the EPE VAT regime.
Non-Cash Payment: VND 5 Million Threshold
Under the VAT Law and Article 26 of Decree 181/2025/ND-CP (input VAT), and Decree 320/2025/ND-CP (CIT deductible expenses, from December 15, 2025), a purchase invoice of VND 5 million or more (inclusive of VAT) requires non-cash payment documentation, apart from special cases, to qualify for input VAT deductions and deductible expense status for Corporate Income Tax. Several purchases from one seller on the same day are added together. Petty cash caps below VND 5 million (many firms set a lower internal cap) keep routine spending outside the rule; exceptions, penalties and internal controls are in the guide to the VND 5 million non-cash payment rule.
VAT Refund: Article 15 Criteria and High-Risk Pitfalls
Investment projects in the pre-operation stage qualify for a cash refund when accumulated uncredited input VAT reaches at least VND 300 million, the full registered charter capital has been contributed by the time the refund dossier is filed (a shortfall at filing means the input VAT is carried forward), and, for conditional business lines, the project holds the required license, certificate, or approval. Once a project or investment phase is completed, which is the date it generates revenue, the enterprise has one year to file the refund, after offsetting the input VAT against VAT payable from current operations (Article 30 of Decree 181). Producers of 5% goods qualify once uncredited input VAT reaches VND 300 million after 12 consecutive months or 4 consecutive quarters (Article 15 of the VAT Law).
On restructuring, Article 32 of Decree 181 allows a refund of overpaid or unabsorbed input VAT on dissolution or bankruptcy; for mergers or divisions, confirm with the tax authority how unabsorbed input VAT is carried forward before restructuring. Dossiers and procedures are in VAT refund for FDI and investment VAT refund, and our VAT refund service prepares and files them.
E-Invoice Updates and Cross-Border Compliance
Decree 254/2026/ND-CP and Circular 91/2026/TT-BTC (effective July 1, 2026, replacing Decree 123/2020/ND-CP and Decree 70/2025/ND-CP) require retail, F&B and hospitality businesses that sell directly to consumers to use cash register e-invoices, unless they have already registered for coded or uncoded e-invoices. Setup and registration are covered in e-invoice registration for FDI.
A Vietnamese buyer using the VAT deduction method that buys services from a foreign provider on an e-commerce platform must withhold and declare tax when it pays, whether or not the provider has registered (Decree 252/2026/ND-CP). The tax comprises VAT under Circular 69/2025/TT-BTC and CIT under Circular 20/2026/TT-BTC; see foreign contractor tax.
Strategic Implementation Timeline
| Regulatory Phase | Effective Date | Legal Framework | Operational Focus for FDI |
|---|---|---|---|
| Phase 1 | June 1, 2025 | Decree 70/2025/ND-CP (in force until June 30, 2026) | Cash-register e-invoices for retail, F&B and hospitality |
| Phase 2 | July 1, 2025 | VAT Law & Decree 181/2025; 8% rate under Resolution 204 | 8% VAT rate extension, VND 5M non-cash rule, agricultural inputs at 5%, Art. 15 refund |
| Phase 3 | January 1, 2026 | VAT Law, Law 149/2025/QH15, Law 09/2026/QH16; Decree 68/2026/ND-CP (as amended by Decree 141/2026/ND-CP) | Households and individual businesses with annual revenue of VND 1 billion or less are outside VAT |
| Phase 4 | July 1, 2026 | Decree 254/2026/ND-CP | E-invoice governance replacing legacy decrees |
| Phase 5 | December 31, 2026 | Res. 204 | Sunset of 8% temporary rate; standard rate reverts to 10% |
Following December 31, 2026, standard goods and services revert to 10%. FDI enterprises executing multi-year supply contracts should review pricing terms to ensure tax adjustment mechanisms protect gross margins.
Contact our Certified CPAs and tax compliance team for VAT and tax compliance support, or for VAT refund filing on investment and export input VAT.
This guide reflects Vietnamese tax regulations updated through September 2026 under Law on VAT No. 48/2024/QH15, Resolution 204/2025/QH15, Decree 181/2025/ND-CP, Decree 174/2025/ND-CP, and Circular 69/2025/TT-BTC.
