Detailed Guide On The Value Added Tax In Vietnam For Business Owners

Value Added Tax applies to most goods and services used for production, business and consumption in Vietnam .  Businesses must identify the correct VAT treatment, issue compliant invoices, maintain supporting records and submit VAT declarations on time. The principal framework is the Law on Value Added Tax No. 48/2024/QH15, effective from 1 July 2025, together with its implementing regulations.

What is Value Added Tax in Vietnam?

Value Added Tax, or VAT, is an indirect tax imposed on the value added to goods and services throughout the production, distribution and consumption process. Businesses generally collect output VAT from customers and may deduct eligible input VAT incurred on business purchases. Although businesses administer and remit the tax, its economic cost is normally borne by the final consumer. 

Goods and services used for production, business and consumption in Vietnam are generally subject to VAT unless the law classifies them as non-taxable. Taxpayers include organisations and individuals supplying taxable goods or services, importers and certain Vietnamese purchasers of goods or services from overseas suppliers. 

What are the VAT rates in Vietnam?

Vietnam’s statutory VAT rates are 0%, 5% and 10%. A separate category covers goods and services that are not subject to VAT. From 1 July 2025 through 31 December 2026, eligible goods and services normally subject to 10% VAT benefit from a two-percentage-point reduction to 8%. 

1. Zero per cent VAT rate

The zero per cent VAT rate applies mainly to to qualifying exported goods and services, international transportation and specified export-related activities, provided the applicable statutory conditions and supporting-document requirements are satisfied. Qualifying activities may include: 

• Goods sold to overseas organisations or individuals and consumed outside Vietnam; 
• Goods sold to enterprises in non-tariff zones and consumed there for export production;  
• Services supplied directly to overseas customers and consumed outside Vietnam; 
• International transportation;  
• Construction and installation work carried out abroad or in a non-tariff zone; and 
• Certain digital information-content products supplied to foreign customers and demonstrably consumed outside Vietnam. 

The 0% rate does not automatically apply merely because the customer is foreign. Businesses must examine where the goods or services are consumed and retain the required contracts, invoices, non-cash payment evidence and, for exported goods, customs and transportation documents. Certain activities—including overseas technology transfers, capital transfers, credit services and telecommunications—are expressly excluded from the 0% rate  

2. 5 per cent VAT rate 

The 5% VAT, which is also referred to as reduced VAT, applies to  specified essential or socially important goods and services, such as ; 

• Clean water supplies, excluding bottled water and other beverages; 
• Fertilisers, ores used to produce fertiliser, plant-protection products and prescribed growth stimulants; 
• Agricultural services and qualifying unprocessed or ordinarily processed agricultural products; 
• Specialised agricultural machinery and fishing vessels; 
• Medical equipment, medicines and pharmaceutical ingredients; 
• Teaching and learning equipment; 
• Traditional and folk performing arts; 
• Children’s toys and qualifying books; 
• Science and technology services; and 
• Sales, leases and lease-purchases of social housing. 

A business should classify each product or service under the detailed statutory rules instead of applying 5% based only on a broad industry description. 

3. 10 per cent VAT rate 

The 10% VAT rate is also known as the standard VAT rate, and it applies to any other industry that is not listed under the 0% vat rate or the reduced vat rate. It also applies to digital and e-commerce services supplied to Vietnamese customers by foreign suppliers without a permanent establishment in Vietnam. 

From 1 July 2025 to 31 December 2026, qualifying goods and services ordinarily subject to 10% VAT are temporarily taxed at 8%. The reduction does not apply to prescribed categories, including: 

• Telecommunications; 
• Finance, banking, securities and insurance; 
• Real-estate business; 
• Metal products; 
• Mining products, except coal; 
• Goods and services subject to special consumption tax, except petrol; and 
• Other items excluded under the applicable implementing schedules. 
• Businesses should review the detailed product and service classifications in Decree No. 174/2025/ND-CP before issuing an invoice at 8%.  

VAT treatment	General application	Input VAT position
0%	Qualifying exports and specified international transactions	Input VAT may generally be deducted or refunded if all conditions are met
5%	Specified essential goods and services	Input VAT may generally be deducted under the deduction method
8%	Temporary rate for eligible items ordinarily taxed at 10%, until 31 December 2026	Input VAT may generally be deducted under the deduction method
10%	Standard rate and categories excluded from the temporary reduction	Input VAT may generally be deducted under the deduction method
Not subject to VAT	Goods and services listed as non-taxable	Related input VAT is generally not deductible or refundable

4. VAT exemption (not subject to VAT)

Goods and services that are not subject to VAT are legally distinct from supplies taxed at 0%. Common examples include  

• Products from certain agricultural   
• Transfer of land use right  
• Capital assignment.  
• Foreign currency trading   
• Certain insurance services  
• Teaching and training  
• Printing and publishing  
• Public transport by bus and tram  
• Transfer of technology, software and software services except for exported software which is entitled to 0% rate  
• Goods and services supplied by business households or individuals with annual revenue of VND 200 million or less, effective from 1 January 2026. 

Businesses supplying non-taxable goods or services generally cannot deduct or obtain a refund of the related input VAT. By contrast, a qualifying 0% supply remains within the VAT system and may support input VAT deduction or refund. 

What are the two methods of calculating VAT in Vietnam?

The two methods of calculating VAT in Vietnam are 

• Credit method (also called as deduction method)  
• Direct method 

1. Tax credit method

The tax credit method applies to business establishments maintaining full books of account, invoices and documents in accordance with the relevant regulations, including  

• Business establishments with annual revenue subject to VAT of VND1 billion or more; and  
• Certain cases voluntarily registering for VAT declaration under the deduction method.  

The VAT the consumer pays when purchasing the finished product from the manufacturer is the output tax. Hence, VAT can be calculated using the following formulas: 

Payable VAT amount = Output VAT – Creditable Input VAT 

• Where Output VAT refers to the total amount of VAT recorded on goods sold or services rendered on VAT invoices and 
• The creditable VAT amount refers to the total amount of recorded VAT on purchased goods and services on VAT invoices and other VAT documents. 

Requirements for the Creditable input VAT 

For a business to fall under the tax credit method, it must meet the following criteria; 

• Relevant to business activities  
• Have valid VAT invoices or prescribed tax-payment document for purchased goods and services 
• Have non-cash payment evidence for purchased goods and services, except for specific cases permitted by the Government; 
• Maintain the required contracts and supporting records; and 
• For exports, retain the additional export documents required by law. 

2. Direct calculating method

With the direct method of calculating VAT, 

• Payable VAT amount = Added Value x applicable VAT rate (applicable to businesses involving the trade of silver, gold, and precious-stone trading or processing) 
• Payable VAT amount =prescribed percentage x Revenue (applicable to other activities covered by the revenue-based direct method). 

The applicable percentages are: 

Business activity	Percentage applied to revenue
Distribution or supply of goods	1%
Services or construction without supplying materials	5%
Production, transportation, services associated with goods, or construction with materials	3%
Other business activities	2%

The revenue-based direct method generally applies to enterprises, cooperatives and cooperative unions with annual revenue below VND 1 billion that have not voluntarily adopted the deduction method; business households and individuals; certain foreign organisations or non-resident individuals; and other organisations not applying the deduction method.

Vietnam VAT declaration and Payment  

VAT is generally declared monthly or quarterly. Taxpayers with revenue exceeding VND 50 billion in the preceding year declare VAT monthly. Eligible taxpayers with preceding-year revenue of VND 50 billion or less may declare quarterly. Newly established taxpayers generally declare quarterly during their initial operating period, subject to the applicable tax-administration rules. 

 The standard filing and payment deadlines are: 

• Monthly declaration: No later than the 20th day of the following month. 
• Quarterly declaration: No later than the last day of the first month following the relevant quarter. 

Businesses should reconcile sales invoices, purchase invoices, accounting records and tax-payment documents before filing. Incorrectly applying an 8% rate to an excluded product or service can result in additional tax, late-payment interest and administrative exposure. 

Electronic Invoices and VAT Compliance 

Businesses applying the deduction method use VAT invoices, while those applying the direct method generally use sales invoices. Transactions must be supported by invoices and documents issued and transmitted in accordance with Vietnam’s electronic-invoice regulations. 

A practical VAT control process should include: 

1. Classifying every product and service before invoicing; 
2. Checking eligibility for the temporary 8% rate; 
3. Verifying invoice details and the supplier’s tax information; 
4. Matching invoices to contracts, delivery evidence and payment records; 
5. Separately recording taxable, non-taxable and export activities; and 
6. Reconciling VAT ledgers before each declaration. 

These controls reduce the risk of applying the wrong rate or losing an input VAT deduction. 

VAT refund in Vietnam

Certain circumstances can qualify a business or enterprise for a VAT refund in Vietnam. Businesses are subject to VAT returns in Vietnam if they find themselves in any of the circumstances listed below: 

• Export activities with at least VND 300 million of eligible, uncredited input VAT for the relevant period; 
• Qualifying investment projects with at least VND 300 million of uncredited input VAT after the required offset; 
• Businesses exclusively producing goods or supplying services subject to 5% VAT that retain at least VND 300 million of uncredited input VAT after 12 consecutive months or four consecutive quarters; 
• Dissolution or bankruptcy where overpaid VAT or uncredited input VAT remains; 
• Qualifying non-refundable ODA, humanitarian-aid and diplomatic cases; and 
• Other cases authorised by law or an applicable treaty. 

For export refunds, the refundable amount generally cannot exceed 10% of export revenue for the refund period. For completed investment projects, a refund application for eligible VAT incurred during the investment stage must generally be filed within one year from the legally determined completion date. datafiles.chinhphu.vn 

Refund applicants must satisfy the applicable accounting, invoice, payment, banking and declaration requirements. They should also confirm that the seller has declared and paid the VAT shown on invoices included in the refund application. The tax authority classifies applications for either refund before inspection or inspection before refund 

In the first eight months of 2026, Vietnam’s state-budget revenue was estimated at VND 2,023.8 trillion, equivalent to 80% of the annual estimate and 16% higher than the same period in 2025. During the same period, approximately VND 209.2 trillion in taxes, fees and land rent was exempted, reduced or deferred. 

STATISTIC-SOURCE: https://mof.gov.vn/bo-tai-chinh/cong-khai-danh-sach-kiem-toan-vien-hanh-nghe-va-doanh-nghiep-kiem-toan/tinh-hinh-thuc-hien-nsnn-thang-8-va-8-thang-dau-nam-2026 mof.gov.vn 

How can we help?

Premia TNC supports businesses in Vietnam with VAT registration, rate classification, invoice review, monthly and quarterly declarations, input VAT reconciliation, refund applications and tax-health checks. Professional review is particularly valuable where a business handles exports, mixed taxable and non-taxable activities, investment projects or products affected by the temporary 8% VAT policy. 

Frequently Asked Questions