Overview of Vietnam's Value Added Tax (VAT) and Key Points of Legal Revisions
2025/07/24
- I-GLOCAL CO., LTD.
- 米国公認会計士
- 渡 柚輝
(Last Updated in 2025 July)
In Vietnam, companies are required to file and pay value added tax (hereinafter referred to as “VAT”) to the tax authorities on a monthly or quarterly basis. The basic concept of VAT is similar to Japan’s consumption tax, but there are several points to note. For example, when applying input VAT credit, there is a high possibility that the tax authorities will raise an issue if a qualified VAT invoice is not available as supporting documentation.
Additionally, in order to receive a VAT refund, it is necessary to submit a separate VAT refund application in addition to the VAT return. This article explains the overview of VAT and the key points of the amendment law passed on November 26, 2024. Since VAT refunds involve complex and important issues, we would like to discuss them separately in the next report.
1. Value Added Tax (VAT) Overview
The following is an overview of the VAT in Vietnam.
| Subject to VAT | Goods and services provided in Vietnam |
| VAT payers | Organizations and individuals that manufacture, sell or import goods and services subject to VAT taxation in Vietnam *Except for export processing enterprises (EPEs) |
| Reporting period | Less than 12 months after establishment or less than 50 billion VND (approx. 300 million yen) in sales in the previous year: Quarterly (payment by the end of the month following each quarter) |
| If sales amount of the previous year is more than 50 billion VND (about 300 million yen): monthly (by the 20th of the month following each month) |
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| Tax Rate | Standard tax rate is 10% *Tax rate is being reduced to 8% until December 31, 2026 as a special measure (except for some services and goods) Tax rate 5%: daily necessities and certain products and services Tax rate 0%: exported goods and services consumed outside the country Tax-exempt: financial, banking and securities services and education and vocational training stipulated by law, etc., notified Items listed in 219/2013/TT-BTC (note that tax rate of 0% ≠ tax-exempt transactions) |
There are two methods of calculating the VAT to be paid, but the deduction method is generally used
・Deduction method: VAT purchased is deducted from the VAT received.
・Direct method: The taxable value is multiplied by the taxable value subject to taxation and the tax rate set by law is multiplied by the tax rate.
In order to deduct VAT on purchases under the deduction method, the following conditions must be met under the law
・Either a qualified VAT invoice, a receipt of payment of VAT on imported goods, or a receipt of VAT paid on behalf of a foreign organization or organization, individual, or foreign person must be preserved.
・(If the transaction value (including VAT amount) is VND5,000,000 or more) the transaction must be conducted on a non-cash settlement basis (after July 1, 2025).
In addition, from a practical standpoint, the following conditions may be pointed out by the authorities if not met.
・The goods must be related to taxable business activities.
・Vouchers showing actual transactions, such as contracts, customs clearance documents, and delivery receipts (especially in the case of imported goods)
If the above conditions are not met due to failure to properly obtain a VAT invoice or incorrect company name on the VAT invoice, there have been cases pointed out by the authorities and disallowed as purchase VAT. It is important to obtain a VAT invoice at the time of transaction, and to confirm the appropriateness of the information on the VAT invoice.
2. Main differences when compared to Japan’s consumption tax
Although the nature of the tax is almost the same between the Vietnamese VAT and the Japanese consumption tax, there are some differences in the practical procedures
| Items | Japan | Vietnam |
| Means of Payments | Cash or non-cash | (When the transaction amount is 5 million VND (approx. 30,000 yen) or more) Non-cash settlement |
| Tax filing period | Once a year | Monthly or quarterly |
| Method of Paymentts | Planned tax payments based on previous year available | Payment of the tax amount incurred in the month following the period covered by the tax return |
| Refund | Any excess is refunded on tax return | Separate application for refund is required. |
| Estimated time required for refund | 2 months | Varies depending on the province where the refund application is submitted, the amount applied for, and the officer in charge. (Hanoi: about 2 – 10 months; Ho Chi Minh: about 2 – 3 years) |
In Japan, since the excess amount can be refunded together with a final tax return, budgets are often prepared on the assumption that a refund will be granted. On the other hand, in order to receive a tax refund in Vietnam, it is necessary to file an application separately from the VAT return, and it is necessary to submit various documents and answer questions from authorities. In addition, while in Hanoi it takes 2-10 months to complete the refund process, in Ho Chi Minh City it often takes 2-3 years to complete the refund process and have the money deposited into the account. Therefore, we recommend that you do not assume a smooth VAT refund when preparing a budget for your Vietnamese corporation.
3. Main Points of the Legal Amendment
The revised VAT law (No. 48/2024/QH15) was passed in November 2024 and will take effect on July 1, 2025. The main points that Japanese companies should pay attention to as a result of this amendment are as follows.
・Stricter “export services” to which the 0% tax rate can be applied for export processing enterprises (EPEs)
The new phrase “directly used in export production activities (goods and services)” was added to the existing legal requirement. Previously, services such as accounting, auditing, and office leasing were interpreted as exportable due to the nature of EPEs, and many of the services received by EPEs from domestic Vietnamese companies were considered to be subject to 0% VAT.
Under the revised law, only services that are performed in non-tariff zones and directly used in export production activities and services such as transportation and port handling for EPE firms will be subject to the 0% tax rate. However, it has not been announced exactly what services will be exempted from the 0% tax rate, so it will be necessary to keep a close eye on future developments.
・If the imported goods are exported as is, they are not eligible for a refund (except when they are imported as raw materials necessary for the manufacture or processing of products for export by EPE companies).
Due to the difficulty of acting as an intermediary in tri-nation trade under Vietnamese law, some corporations have been seen to engage in intermediary business, in effect exporting imported goods as they are. Although a VAT refund was previously allowed on the purchase VAT related to such transactions, it has been clarified that such VAT will no longer be refundable.
・Establishment of deadlines for applying for VAT refunds for the investment period
A deadline (within 12 months of the start date of recording sales (excluding prototype sales and financial income)) has been set for VAT refunds on equipment purchased by companies engaged in manufacturing and other businesses.
In the past, it was often interpreted that a refund could be applied for until the investment project was completed, and in practice, there were cases where a refund was applied for at any time when the accumulated amount exceeded 300 million VND. However, from now on, it will be necessary to file for refunds in a timely manner, and late filings will result in no refunds. In particular, corporations that recorded sales before June 2024 and have not yet applied for a VAT refund for the investment period should be aware that if they do not apply by June 2025, they will not be eligible for a refund.
・Authorization of refunds for expansion investments
While applications for refunds for capital investment in new projects have been approved in the past, refunds for investment in expansions have been denied in some cases, depending on the nature of the expansion. The recent amendment clarifies that investment in expansion of existing projects, such as capacity expansion or upgrading of facilities, is also eligible for refunds.
・Stricter purchase VAT deduction requirements
Until now, non-cash settlement was required for transactions of VND20 million or more for VAT deduction on purchases, but with the recent amendment, non-cash settlement is now required for transactions (including VAT amount) of VND5 million or more. In addition, the following documents must be submitted in order to receive a VAT deduction/refund on export purchases. (There are some differences depending on the nature of the goods, etc.)
・Transport documents (bills of lading, contracts of carriage, etc.)
・Proof of receipt of goods (e.g., receipt or buyer’s signed acknowledgement of receipt)
・ Product inspection certificates (e.g., quality certificates and acceptance certificates issued by the inspection period)
・ Electronic trails (e.g., electronic invoices and transaction records in the system)
The impact of VAT on companies is significant because, in principle, VAT is incurred on all transactions. Therefore, changes in VAT laws and regulations have a significant impact on corporate activities.
Although the revised law clarifies to some extent the documents required for VAT refund procedures, it is expected that additional documents will continue to be requested depending on the official in charge. VAT refunds have become an important issue, especially in southern Vietnam, where the procedures have become increasingly complex and lengthy. In the following report, we will explain the current status and future prospects of VAT refunds, taking into account the impact of this legal revision.
Due to the complexity of the VAT refund process, it is recommended that appropriate accounting and tax specialists be consulted in order to review the practical process and implement the VAT refund in accordance with the revised law.
【Contact】 I-GLOCAL CO., LTD.
PIC：Yuzuki WATARI yuzuki.watari@i-glocal.com
Ho Chi Minh Office: +84-28-3827-8096 Ha Noi Office: +84-24-2220-0334
