Vietnam VAT Rates and Applicability in 2025: A Brief Guide_风险与合规_越南资讯

Vietnam’s Value Added Tax (VAT) system is undergoing significant changes in 2025, as outlined in recent legislative updates.

Revised VAT rates and applicability

While Vietnam still applies the rates of 0, 5, and 10 percent for VAT, the eligible scope for each rate has been largely modified by Law No. 48/2024/QH15, as well as Decree No. 181/2025/ND-CP and Circular No. 69/2025/TT-BTC. For business owners or investors, understanding these changes is crucial for compliance and strategic planning in the Vietnamese market.

0 percent rate

Pursuant to the new VAT law, effective from July 1, 2025, a 0 percent VAT rate will be applicable for the following cases:

Category	Scope of eligibility
Exported goods	Goods sold from Vietnam to organizations or individuals abroad and consumed outside Vietnam, except for goods that were first imported and then re-exported; Goods sold from mainland Vietnam to organizations in non-tariff zones and consumed within those zones, directly serving export production activities; Goods sold at isolated areas to individuals (foreigners or Vietnamese) who have completed exit procedures; Goods sold at duty-free shops; and Goods delivered and received in Vietnam as designated by a foreign trader under contracts for sale, processing, leasing, or borrowing between Vietnamese enterprises and the foreign trader (“on-spot import-export transactions”).
Exported services	Services provided directly to overseas organizations or individuals and consumed outside Vietnam, with the condition that the individual must be outside Vietnam during service delivery; and Services provided directly to organizations in non-tariff zones and used within these zones to directly support export production activities.
Other exported goods and services	International transportation; Rental services of vehicles used outside the territory of Vietnam; Aviation and maritime services provided directly or through agents for international transportation; Construction and installation activities carried out overseas or within non-tariff zones; Digital content products supplied to foreign parties with supporting documentation evidencing overseas consumption; Spare parts and materials used for the repair and maintenance of vehicles, machinery, and equipment for foreign parties and consumed outside of Vietnam; Onward processed goods for export in accordance with the law; and Goods and services subject to non-VAT when exported, except the followings: Transferring technology or intellectual property rights to foreign countries; Issuing reinsurance policies for foreign countries; Credit extension services; Transferring capital; Derivatives; Postal and telecommunications services; Exports that are raw natural resources or minerals under the regulated list; Tobacco, alcohol and beer imported and then exported; Oil and gas purchased in domestic and sold to businesses in free trade zones; Cars sold to organizations and individuals in free trade zones; Services provided in Vietnam for overseas organizations and individuals, such as sports competitions, art performances, entertainment, conferences, hotels, advertising, and travel services; Services related to selling, distributing, and consuming goods in Vietnam; Cashless payment services; Services provided by businesses to organizations and individuals in free trade zones, including renting houses, halls, offices, hotels, and warehouses; Employee shuttle services; and Food and beverage services, excluding industrial catering services and food and beverage services within free trade zones.

5 percent rate

While the 2024 VAT Law simply listed the general categories of goods and services subject to the 5 percent rate, Decree 181 has gone a step further by specifying these categories, providing a clearer framework for compliance.

Category	Scope of eligibility
Fertilizers, ores, pesticides, growth stimulants	Fertilizers and ores used for producing fertilizers (e.g., phosphorus-containing fertilizers, humus as biofertilizer); and Pesticides and growth stimulants for livestock as regulated by law.
Agricultural services	Excavation and dredging of canals, ditches, and ponds for agricultural use; Cultivation, care, and pest control for crops; and Preliminary processing and preservation of agricultural products (cleaning, drying, milling, shelling, cutting, salting, canning, freezing, fumigation, etc.).
Raw agricultural, forestry, livestock, and fishery products	Products from crops, planted forests (excluding timber and bamboo shoots), livestock, aquaculture, and fishing; and Must be unprocessed or only preliminarily processed (except those listed in Article 4.1 of the Decree).
Rubber and fishing nets	Natural rubber latex in forms such as crepe, sheets, crumbs, granules; and Fishing nets, ropes, and yarn used for making fishing nets.
Handicrafts and raw materials	Handicraft products made from jute, sedge, bamboo, rattan, leaves, straw, coconut husk/shell, water hyacinth, and other agricultural by-products; and Newsprint paper.
Fishing vessels and agricultural machinery	Seagoing fishing vessels for offshore operations; and Specialized agricultural machinery (plows, seeders, rice planters, harvesters, threshers, dryers, milking machines, poultry incubators, etc.).
Medical equipment, medicines, pharmaceuticals	Medical devices with import licenses, marketing authorization certificates, or registration as required by law; Medicines for prevention and treatment (finished drugs, raw materials, vaccines, biological products, distilled water for injection, infusion solutions); and Excludes dietary supplements.
Traditional and folk performing arts	Traditional art and folk performances as defined under cultural heritage and performance regulations.
Children’s products and books	Children’s toys; and All types of books, except categories excluded under Article 4.8 of the Decree.

10 percent rate: 2 percent reduction till end of 2026

Except for items subject to the 0 and 5 percent rates, or exempt from VAT, all other goods and services in Vietnam are taxed at a 10 percent VAT rate. However, the government has continuously extended its 2 percent reduction for this rate to support the country’s economic recovery after the COVID-19 pandemic. The latest extension prolongs the duty cut from July 1, 2025, until December 31, 2026.

Accordingly, goods and services will be taxed at the 8 percent rate until the end of 2026. VAT reduction will apply uniformly across all stages – importation, manufacturing, processing, and trading – for eligible goods and services outlined in Point 1, Article 1 of Decree No. 174/2025/ND-CP, excluding:

Telecommunications;
Financial and banking services;
Securities;
Insurance;
Real estate business;
Metal production and production of prefabricated metal products;
Mining (excluding coal mining); and
Goods and services subject to special consumption tax (excluding gasoline).

Furthermore, effective from July 1, 2025, services provided by foreign suppliers without a permanent establishment in Vietnam to organizations or individuals in Vietnam through e-commerce channels and digital platforms will be subject to a VAT rate of 10 percent.

VAT-exempt goods and services

Decree 181/2025 specifies a list of goods and services not subject to VAT, as follows:

Agricultural, forestry, livestock, and aquatic products;
Assets and real estate: State-owned housing sold to current tenants, as stipulated by housing laws and land use rights transfer;
Financial, banking, securities, and capital transactions;
Funeral services;
Public, cultural, and social infrastructure;
Teaching and vocational training as regulated by education and vocational training laws, and amounts collected and paid by educational and vocational training institutions under payment and collection orders;
Press, publishing, and cultural publications;
Public passenger transport;
Specialized imported machinery and equipment: Goods not yet domestically produced, used for scientific research, technological development, oil and gas exploration, or accounted as fixed assets for enterprises;
Humanitarian and non-refundable aid: Imported goods and locally purchased goods/services funded by humanitarian aid or non-refundable aid;
Special import-export goods:
- Goods in transit, temporary import for re-export, temporary export for re-import;
- Imported raw materials for processing goods for export; and
- Transactions between foreign parties and non-tariff zones, and among non-tariff zones;
Technology transfer, intellectual property, and software: Technology transfer, assignment of intellectual property rights, as well as software products and services;
Export of natural resources and minerals; and
Other exempt imported goods: Gifts to State agencies and mass organizations within duty-free limits, personal gifts, goods donated for disaster relief, epidemic control, war recovery, and other regulated cases.

Recovery support: Items not required to declare and pay VAT

Under the revised VAT law, Vietnam’s lawmakers have established new exemptions for products that support the recovery of the agriculture sector following the devastating impacts of the 2025 typhoon season.

Accordingly, businesses that purchase products from cultivated crops, planted forests, livestock farming, aquaculture, or wild-caught fisheries that have not been processed into other products or have only undergone basic preliminary processing, and sell them to other businesses, are not required to declare, calculate, or pay VAT.

Takeaway

The revised VAT framework in Vietnam for 2025 introduces specific eligibility criteria for each VAT rate. This update aims to enhance clarity and compliance, promote economic activity, and define the tax landscape more effectively.