VAT and e-invoicing: the 2024 VAT Law, rates and exemptions, the 8% reduction, credit and direct methods, input VAT recovery and refunds, e-invoices and foreign digital suppliers

The law and the authorities

Value added tax (thuế giá trị gia tăng, VAT) is charged on goods and services supplied and consumed in Vietnam and on imports. Law No. 48/2024/QH15 on Value Added Tax replaced the 2008 law on 1 July 2025, and was detailed on the same day by Decree No. 181/2025/ND-CP and Circular No. 69/2025/TT-BTC, which also replaced the VAT provisions of the earlier circulars, including those for foreign contractors in Circular No. 103/2014/TT-BTC. Law No. 90/2025/QH15, also in force from 1 July 2025, added on-the-spot exports to the goods eligible for the 0% rate. Law No. 149/2025/QH15, passed on 11 December 2025 and in force from 1 January 2026, amended the 2024 law: an enterprise or cooperative that buys unprocessed or only preliminarily processed crop, forestry, livestock, aquaculture and fishery products and sells them to another enterprise or cooperative need not declare or pay VAT on that sale but may still credit its input VAT (sales of such products to households, individual businesses and consumers bear 5%); the annual revenue below which household and individual businesses are outside VAT rose from VND 200 million to VND 500 million; and the refund condition on the seller's own compliance was removed. Decree No. 359/2025/ND-CP of 31 December 2025 amended Decree No. 181/2025/ND-CP to match. VAT on domestic supplies is administered by the Tax Department and its provincial offices; VAT on imports is collected by the Customs Department at the border, alongside import duty (Customs and import duties).

A company is registered for tax automatically when it receives its Enterprise Registration Certificate, because the enterprise code is also the tax code; there is no separate VAT registration threshold for companies (FAQ 22). Before issuing its first invoice it must register to use e-invoices, as explained below and in Setting up a company step by step.

Rates and exempt supplies

The standard rate is 10%. A 5% rate applies to the essential goods and services listed in the law, including clean water, fertiliser (moved from exempt to 5% by the 2024 law), teaching aids, medical equipment and medicines, certain agricultural products and services, and social housing. A 0% rate applies to exported goods and services, including goods sold into export processing enterprises and non-tariff zones, international transport, and services consumed outside Vietnam; Decree No. 181/2025/ND-CP requires a contract, non-cash payment and, for goods, the customs declaration, and confirms that transport and handling services supplied to export processing enterprises for export production qualify.

Supplies outside the scope of VAT, often called exempt supplies, cannot carry output VAT and their related input VAT is not creditable. They include credit, most financial and securities services and derivatives, life and health insurance, medical services, education and vocational training, the transfer of land use rights, the transfer of technology and intellectual property rights as defined by the specialised laws, unprocessed agricultural products at the producer stage, and goods imported for humanitarian or defence purposes. A business making both taxable and exempt supplies apportions its input VAT, normally by the ratio of revenue.

The rate is fixed by the nature of the supply, not by the supplier. A mixed contract in which the elements can be separated is taxed element by element; where they cannot, the guidance applies the higher rate. Disputes about rates are common for bundled services, software with implementation, and goods with installation.

The 8% rate until 31 December 2026

Resolution No. 204/2025/QH15 of the National Assembly and Decree No. 174/2025/ND-CP reduce the 10% rate to 8% from 1 July 2025 until 31 December 2026. The reduction does not apply to telecommunications, finance, banking, securities, insurance, real estate business, metals and fabricated metal products, most mining products, and goods and services subject to special consumption tax; for those, 10% continues. Businesses on the direct method enjoy a corresponding 20% reduction in the percentage applied to revenue. The reduced rate is shown on a separate e-invoice line and must be applied at every stage of the chain where the goods qualify.

The practical difficulty is classification. Annex I to the decree lists the excluded goods by HS code, and a supplier of mixed goods may have to apply both rates on one invoice. Contracts priced for delivery in 2027 should state whether the price is exclusive of VAT, because unless the reduction is extended the rate returns to 10% on supplies made from 1 January 2027.

Credit method and direct method

Under the credit method (phương pháp khấu trừ) the company charges output VAT on its invoices and deducts the VAT it paid on purchases and imports, paying the difference or carrying forward a credit. The credit method is compulsory for a business whose annual revenue reaches VND 1 billion, and a new foreign-invested company registers for it from the start in practice, because its customers expect a VAT invoice and because it wants to recover the VAT on its set-up costs. Under the direct method (phương pháp trực tiếp), used by smaller businesses, household businesses and for trading in gold, silver and precious stones, VAT is a percentage of revenue (1% for distribution of goods, 5% for services, 3% for production, transport and construction with materials, 2% for other activities) and no input VAT is deducted.

VAT returns are filed monthly by the 20th of the following month, or quarterly by the last day of the month after the quarter where prior-year revenue was VND 50 billion or less; a new company chooses quarterly filing in its first year. The filing calendar is in Compliance calendar after licensing.

Recovering input VAT

Input VAT is creditable if four conditions are met. The purchase must be used for VAT-taxable business. The company must hold a lawful e-invoice, or the import VAT payment document, showing the VAT. For purchases of VND 5 million or more, inclusive of VAT, it must hold a non-cash payment voucher; payment in shares or bonds is accepted where the contract provides for it. And the invoice must be declared in the period in which it is received, or later by supplementary declaration before the tax authority opens an audit. Where payment is deferred, the credit is allowed when the invoice is received but reversed if payment is later made in cash.

The 2024 law added a refund condition that troubled buyers: the seller must have declared and paid the VAT on the invoices claimed (Article 15(9)(c)). Law No. 149/2025/QH15 repealed it from 1 January 2026, and Decree No. 359/2025/ND-CP also applies the change to refund claims received before that date that had not yet been decided. Supplier due diligence still matters, because an invoice from a supplier that does not exist or is not operating can still be rejected at audit, so payment against a valid invoice and contractual indemnities for invalid invoices remain part of ordinary procurement. Input VAT on assets and costs used for exempt supplies, on purchases paid in cash above the threshold, and on invoices from suppliers that have ceased operating at their registered address is not creditable.

VAT refunds

Excess input VAT is normally carried forward. A refund may be claimed in defined cases under Article 15 of Law No. 48/2024/QH15 and Section 3 of Chapter III of Decree No. 181/2025/ND-CP. An exporter may claim where unrecovered input VAT attributable to exports reaches VND 300 million in a month or quarter. A new investment project, or an expansion project, in its investment phase may claim where accumulated input VAT reaches VND 300 million; projects that began before 1 July 2025 and are still in the investment phase may use the new rules. A business supplying only 5%-rated goods or services may claim where unrecovered input VAT reaches VND 300 million after 12 consecutive months or four consecutive quarters. Refunds are also available on dissolution, bankruptcy and in certain treaty and aid cases.

The claimant must use the credit method, keep proper accounts, hold a bank account registered with its tax code and meet the credit conditions above; since 1 January 2026 it no longer has to show that the seller declared and paid the VAT on the invoices claimed. Refunds are refused in the cases the law excludes, which in practice include project investment where a conditional business line has not been licensed, and the tax authority classifies each claim as refund-first, check-later or check-first, refund-later according to risk. Law No. 108/2025/QH15 on Tax Administration provides for refunds to be processed automatically on electronic data where the risk criteria allow.

How to claim a VAT refund for a new investment project

1. Separate the project's input VATAccount for the project's input VAT separately from any other business of the company, and keep the e-invoices and non-cash payment vouchers for each purchase of VND 5 million or more.
2. Check the threshold and the conditionsConfirm that accumulated unrecovered input VAT of the project has reached VND 300 million, that the project is still in its investment phase, and that any sector licence required for a conditional business line has been obtained.
3. Check your suppliers' complianceBefore filing, confirm through the tax authority's lookup tools that the main suppliers are active at their registered addresses and that their invoices are valid; since 1 January 2026 a supplier's own failure to declare or pay no longer bars the refund, but invoices from suppliers that have ceased operating can still be challenged.
4. File the refund dossierFile the request on the prescribed form with the list of invoices electronically through the tax portal, one dossier per refund case, after declaring the input VAT in the VAT return for the period.
5. Respond to the tax authority's classificationIf the claim is classified for checking before refund, expect a request for contracts, payment records and investment documents and, for higher-risk claims, a visit; answer within the time given.
6. Receive the refund and reconcileThe refund is paid to the registered bank account. Reconcile it in the next VAT return; any amount later found to be excessive is recovered with late-payment interest of 0.03% a day.

E-invoices and cash-register invoices

Every invoice in Vietnam is electronic. Decree No. 123/2020/ND-CP, as amended by Decree No. 70/2025/ND-CP from 1 June 2025, requires a seller to register its e-invoice use with the tax authority, issue invoices through an approved service provider's system and, for invoices with a tax authority code, obtain that code before sending the invoice. Invoices without a code are transmitted to the tax authority. The decree fixes the time of issue: for goods, when ownership or the right to use passes; for services, when the service is completed, whether or not payment has been received, a rule that now expressly covers services to foreign customers; for exports, no later than the working day after customs clearance; and for construction, on acceptance. Exporters may now issue electronic commercial invoices where their data meet the tax authority's format.

Decree No. 70/2025/ND-CP also introduced e-invoices generated from cash registers connected to the tax authority. They are compulsory for household and individual businesses with annual revenue of VND 1 billion or more, and are used by enterprises selling directly to consumers, such as retailers, restaurants, hotels, passenger transport and entertainment businesses; they need no digital signature but carry a tax authority code or QR code. Errors are now corrected by an adjusting or replacement invoice rather than cancellation, several erroneous invoices to one buyer in a month can be corrected together with a listing, and for returns either the seller issues an adjustment or the buyer issues an invoice for the returned goods by written agreement. Sellers declare tax by reference to the date of issue and buyers by reference to the date they receive a correct invoice.

Foreign suppliers of digital services

A foreign supplier without a permanent establishment that sells digital services, online advertising, cloud services, apps, games or goods through a platform to customers in Vietnam is liable to VAT and to CIT on a deemed basis. Since 1 July 2025 the VAT Law has placed the collection obligation, where it can, on Vietnamese parties: an organisation that operates a digital platform on which foreign suppliers sell must deduct and pay the tax on their behalf, and a Vietnamese business on the credit method that buys services from a foreign supplier must withhold the VAT and the CIT element as foreign contractor tax (Foreign contractor tax and tax treaties). Where neither applies, typically for sales to consumers, the foreign supplier registers, declares and pays through the tax authority's electronic portal for foreign suppliers. Decree No. 70/2025/ND-CP lets such a supplier register voluntarily to issue e-invoices through the same portal, which business customers value because it supports their deductions.