Other BriefingsVietnam's Tax and Transfer Pricing Compliance: New Regulations in VAT Law
In response to the significant challenges that businesses in Vietnam currently face, a series of new regulations has been introduced, beginning in late 2024, designed to enhance the operating environment for enterprises. This article outlines the key developments that stakeholders should be aware of in order to navigate Vietnam's tax and transfer pricing compliance effectively.
New Value Added Tax Law
Vietnam’s new Law on Value Added Tax (VAT), set to take effect on July 1, 2025, introduces significant changes to the country’s VAT regime. This law, accompanied by the latest updates following the conclusion of the 9th session of the 15th National Assembly (NA), is set to significantly alter the VAT treatment in Vietnam, requiring enterprises to make considerable effort to maintain compliance.
Changes in exported goods and services entitled to 0 percent VAT
According to Law No. 90/2025/QH15 amending the Customs Law, the VAT Law and seven other laws (“Law 90/2025”), exported goods now include:
- Goods sold from Vietnam to overseas entities and individuals, which are consumed outside of Vietnam;
- Goods from inland Vietnam sold to companies in non-tariff zones for direct use in export production activities;
- Goods sold in quarantined areas to individuals who have completed exit procedures; Goods sold at duty-free shops; and
- Goods sold from Vietnam to overseas entities are delivered to another company in Vietnam at the direction of the overseas entities (“on the spot export and import scheme”).
Meanwhile, Vietnam determines exported services as those provided directly to individuals and companies abroad, consumed outside Vietnam, or services delivered directly to companies in non-tariff zones, serving export production efforts.
Also read: Vietnam Notifies 2% VAT Reduction till End of 2026
Foreign companies engaged in e-commerce and digital services
According to the new VAT Law, goods and services supplied by foreign vendors on e-commerce and digital platforms will incur a 10 percent VAT starting July 1, 2025. Businesses must pay closer attention to this change to ensure compliance with the new regulations.
VAT Refund
The new VAT Law eliminates VAT refunds for changes in ownership, enterprise type, merger, consolidation, separation, or de-merger, retaining only cases related to dissolution. Additionally, it introduces new instances in which businesses that exclusively produce goods and offer services subject to a 5-percent VAT rate may be eligible for a VAT refund if the amount of unclaimed input VAT reaches VND 300 million (approximately US$11,900) or more after 12 consecutive months or four consecutive quarters, as well as for refunds pertaining to business expansion investments.
For more information regarding the new VAT Law, please read: Vietnam’s New VAT Law: Key Compliance Guidance
Adjusted thresholds for the VAT compliance regime
Vietnam’s updated VAT Law has removed the limit on non-cash payments. Decree No. 181/2025/ND-CP, dated July 1, 2025, detailing several provisions of this new VAT Law, specifies that businesses are required to have non-cash payment receipts for goods and services (including imported goods) priced at VND 5 million or above, inclusive of VAT. Thus, transactions exceeding VND 5 million (approximately US$192) must be completed via non-cash payment, unless the government grants an exception.
Furthermore, the updated Law will increase the annual revenue threshold for business individuals and households exempt from VAT from VND 100 million (US$3,900) to VND 200 million (US$7,900). This measure will take effect on 1 January 2026.
On-spot import and export activities in Vietnam
Over the past three years, on-spot import-export activities in Vietnam have been the subject of ongoing discussion and remain unresolved. One of the main issues is that the previous update of Vietnam's customs regulations has suggested abolishing the on-spot import-export scheme. In Official Letter No. 1872/BTC-TCT addressed to the People’s Committee of Dong Nai Province, dated February 17, 2025, the Ministry of Finance confirmed that when Vietnamese companies sell goods to foreign companies with a presence in Vietnam, and the goods are delivered to a bonded warehouse, such transactions are not considered exports, thus do not qualify for the 0 percent VAT rate.
However, the concern is now settled with the ratification of Law 90/2025. Effective from July 1, 2025, the new law sets a refined definition for on-spot import-export transactions as “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.” This amendment clears the way for many foreign traders by removing the previous requirement of not having a presence in Vietnam.
This amendment provides a clear legal basis to apply VAT zero rating to on-spot import-export activities going forward. For past shipments, where a 0 percent VAT rate has been challenged, this will be subject to further work and discussion.
For more details, please read: Vietnam’s Import-Export Regime: Managing Customs and Tax Benefits
Global Minimum Tax
On 29 November 2023, Vietnam’s Ministry of Finance issued Resolution No. 107/2023/QH15 (“Resolution 107”), which provides initial information on the Global Minimum Tax (GMT) in Vietnam. According to this Resolution, the GMT regulation will apply in Vietnam starting from the 2024 financial year. However, as of today, the decree that will provide more specific guidance on how to comply with the GMT is still in draft form.
The finalization of the decree has not yet been decided, as Vietnam’s tax system underwent significant internal restructuring beginning in March 2025, and the recent reorganization of provincial-level administrative units.
For more information regarding GMT in Vietnam, please read:
- Global Minimum Tax (GMT) in Vietnam - Vietnam Guide | Doing Business in Vietnam
- How Vietnam Will Implement the Global Minimum Tax: Draft Decree
- Vietnam Introduces Tax Department under Decision 381
VAT invoice
Effective from 1 June 2025, Decree No. 70/2025/ND-CP (“Decree 70”) will amend and supplement a broad range of provisions under the current invoice regulation – Decree No. 123/2020/ND-CP (“Decree 123”), focusing on enhancing compliance, simplifying e-invoice issuance procedures, and improving integration with the tax authority’s systems. On May 31, 2025, Vietnam’s Ministry of Finance issued Circular 32, which prescribes a wide range of invoice management rules under Decree 70 and Decree 123.
For more information, please read:
- Invoice Compliance in Vietnam: Key Changes under Decree 70
- Vietnam Updates E-Invoice Regime: Highlights from Circular 32
Transfer pricing updates
On 10 February 2025, the Vietnamese government issued Decree No. 20/2025/ND-CP (“Decree 20”), which amends certain articles of Decree No. 132/2020/ND-CP (“Decree 132”). The decree, effective as of 27 March 2025, aims to provide a more transparent framework for tax compliance related to transfer pricing issues. The decree will take effect from the financial year 2024 onwards.
Update the TP declaration form
Decree 20 presents a revised version of Appendix I – Disclosure of Related Parties and Related Party Transactions, which updates the related party relationships. This revised template will take effect starting in the 2024 financial year, superseding the current one specified in Decree 132.
Amendments of related parties through financial borrowings
Decree 20 amends the conditions for determining an entity as a related party based on financial borrowings, which state that the outstanding balance of covered borrowings must be:
- At least 25 percent of the borrower’s equity; and
- At least 50 percent of the total outstanding balance of medium and long-term liabilities.
Transitional guidance related to the interest deductibility cap
If, during the tax years 2020, 2021, 2022, and 2023, taxpayers only participated in related party borrowing transactions with financial institutions under Decree 132 and become disqualified as related parties from 2024 due to the criteria outlined in Decree 20, they can distribute non-deductible expenses evenly over the remaining years. Specifically, non-deductible interest expenses up to the end of 2020 may be allocated equally to 2024 and 2025 for the purpose of deduction.
Supplements for related party cases
Decree 20 modifies descriptions for certain related parties as follows:
- Branches considered related parties: A branch is deemed a related party if it satisfies the following conditions:
- Being an independent branch;
- Paying corporate income tax (CIT); and
- Being subject to the actual management, control, and decision-making concerning another enterprise’s production and other business activities.
- Credit institutions with subsidiaries/controlling companies/affiliates: Credit institutions with subsidiaries, controlling companies, or affiliates are regarded as related parties if they fulfill the requirements set forth in the Law on Credit Institutions and any amendments, supplements, or changes, if applicable.
For more information, please read: Related Party Transactions in Vietnam: Key Provisions Under Decree 20
(This article was originally published April 29, 2025. It was last updated July 1, 2025.)
This article first appeared on Vietnam Briefing, our sister platform.
