VAT is levied on goods and services for production, trading, or consumption in Vietnam, including those purchased from non-residents, with certain exemptions. Rates vary by jurisdiction.

• 0% VAT applies to exported goods/services, including transfers overseas or to non-tariff areas, consumption outside Vietnam/non-tariff areas, sales to duty-free shops, goods produced for export, international transportation, and exported services.
• 5% VAT applies to essential sectors: raw foodstuffs, clean water, medicine, medical equipment, teaching aids/books, husbandry and technical services, sports services/products, and social housing.
• 10% VAT (standard rate) applies to all other goods/services not exempt, not subject to VAT, or not at 0% or 5%.

When supplies cannot be classified by tax tariff, VAT is calculated at the highest rate applicable to the business's range of goods.

Temporary 8% VAT Rate

As economic stimulus, the standard 10% rate is temporarily reduced to 8% for most eligible goods/services until December 31, 2026. Excluded sectors include telecommunications, finance, banking, securities, insurance, real estate, metals, mining (except coal), chemicals, refined petroleum, IT products/services, and goods subject to special consumption tax.

Businesses must apply rates correctly for pricing, invoicing, reporting, and planning; misapplication risks penalties or return adjustments.

For mixed-rate sales, invoices must specify each rate separately or use separate invoices. Eligible reductions must be declared on Form 01.

Exempt Goods/Services (Not Subject to VAT)

Exempt items include: agricultural products; imported/leased drilling rigs, aircraft, ships not producible in Vietnam; goods/services by individuals with annual revenue ≤ VND 100 million; fund management, land use rights transfer, debt factoring, medical/elderly care, foreign currency trading, public transport, teaching/training, exported raw natural resources.

Additional non-VAT supplies (no output VAT charged, but input VAT creditable): emission rights/financial derivatives transfer; investment transfer; services by foreign organizations without Vietnam permanent establishment; unprocessed/preliminarily processed raw agricultural sales; capital contributions; insurance compensations/indemnities; collections unrelated to goods/services provision; agent commissions for specified-price sales, international transportation/insurance, or exempt goods; reimported exported goods (e.g., returns).

Historical Reductions (2022–2024)

• Decree 15/2022/NĐ-CP (Jan 28, 2022) and Decree 41/2022/NĐ-CP (Jun 20, 2022): Reduced 10% to 8% from Feb 1–Dec 31, 2022.
• Decree 44/2023/ND-CP (Jun 30, 2023): Reduced to 8% from Jul 1–Dec 31, 2023.
• Resolution (Nov 29, 2023): Extended to 8% from Jan 1–Jun 30, 2024.

This supported post-pandemic recovery, applying across importation, production, processing, and sales (with exclusions as above).

Declaration and Payment

Organizations/individuals producing/trading VATable goods/services must register for VAT; branches may register/declare separately.

Deadlines: Monthly by 20th of next month; quarterly by last day of first month of next quarter (for ≤ VND 50 billion prior-year revenue).

Decree 34/2022 (May 28, 2022) extended 2022 VAT/land rental payments for eligible small/micro businesses, prioritized industries (agriculture/forestry/fisheries, construction, transportation/warehousing, employment/travel services): 6 months for Mar–May/Q1; 5 months for Jun/Q2; 4/3 months for Jul/Aug.

VAT Refund Basics

Under the credit method, excess input VAT over output may qualify for refunds, especially for exporters or investment projects. Requires compliant invoices, detailed records, and timely filing; aids cash flow and compliance.

Common Mistakes to Avoid

• Incorrect rate application (e.g., confusing 8%/10%, misclassifying 5%/0%/exempt).
• Documentation errors (missing/mismatched/non-compliant e-invoices), risking rejected refunds/audits.
• Late filing/payment, incurring fines/interest.
• Misclassifying exempt/zero-rated supplies, distorting calculations/reporting.
• Insufficient staff training/internal controls.

Proactive monitoring ensures compliance, accuracy, and avoids penalties.