Vietnam Simplifies VAT: New Rules Boost Business Friendliness
Vietnam has introduced significant changes to its Value Added Tax (VAT) regulations, with Decree No. 181/2025/ND-CP published in the Official Gazette on July 1, 2025. The Ministry of Finance announced the amendments, which aim to simplify VAT administration and clarify refund eligibility for businesses.
The new decree, effective from July 1, 2025, introduces several key adjustments to the VAT rate structure. Exports will now be subject to a zero percent rate, while certain specified goods will face a 5 percent rate. Additionally, businesses with unrefunded input VAT totaling 300 million dong (approx. US$11,411) or more can now receive refunds on a monthly or quarterly basis.
For businesses with annual sales of 1 billion Vietnamese dong (approx. US$38,032) or more, the deduction method is now available, subject to specific exceptions. The decree also clarifies a list of nontaxable goods and services, including agricultural products, land use right transfers, and certain financial services.
The decree ensures that investment projects initiated before July 1, 2025, including those still in the investment phase, remain eligible for VAT refunds. It also specifies taxable price definitions for asset leasing, goods processing, and construction activities. These changes aim to create a more business-friendly environment, streamline VAT administration, and provide clarity for businesses operating in Vietnam.
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