On June 17, 2025, the Vietnamese National Assembly passed a resolution extending the policy of reducing value-added tax (VAT) until the end of 2026, from 10% to 8%. This policy, first implemented in February 2022 to support economic recovery after the COVID-19 pandemic, has proven to have a positive impact on businesses and consumers.
Extending the policy will not only help reduce operating costs for businesses but also boost domestic consumption and enhance the competitiveness of Vietnamese products in the market.
In this article, we will explore in detail the value-added tax (VAT) reduction policy, the eligible entities, and implementation guidelines for businesses.
Information
National Assembly passes Resolution on VAT reduction: Expanding the scope and extending the implementation period.
New points in the Resolution
Compared to previous extensions, this policy has several notable new features. First, The scope of application has been expanded.This includes expanding into transportation, logistics, and information technology (IT) products and services. These sectors are considered drivers of economic growth, especially in the context of digital transformation and international integration. Furthermore, the policy continues to apply to sectors that have already benefited, such as aviation, tourism, education, agriculture, processing, and social housing, in order to maintain the momentum of economic recovery.
VAT reduction rate
Businesses that calculate value-added tax using the deduction method are subject to a value-added tax rate of 8% for goods and services specified in Clause 1, Article 1 of Decree 180/2024/ND-CP.
Businesses (including household businesses and individual businesses) that calculate value-added tax (VAT) using the percentage-based method on revenue are entitled to a 20% reduction in the percentage rate used to calculate VAT when issuing invoices for goods and services eligible for VAT reduction.
🎯 Apply
The subjects and period of application of the VAT reduction policy until the end of 2026.
Time application
The policy of reducing VAT by 8% will be in effect from [date]. July 1, 7 to December 2025, 31.
Subject of application
The 8% VAT reduction policy applies to the following groups of goods and services:
- Air
- Tourists
- Stay
- Food Service
- Education and training
- Agriculture
- Processing and production
- Social housing
- Transportation and logistics
- Information technology (IT) products and services
Industries and goods No The following are eligible for reduced tax rates:
- Telecommunication
- Finance and banking
- Stock
- Insurrance
- Real estate
- Metal products
- Mineral products (excluding coal)
- Goods and services subject to excise tax (excluding gasoline and diesel fuel)
⚙️ Execution
Sequence and procedures for implementing the VAT reduction policy.
To effectively implement the VAT reduction policy and comply with legal regulations, businesses need to take the following steps:
Step 1: Verify eligibility:
- Businesses need to compare their list of goods and services with the regulations in Article 9, Clause 3, Law on Value Added Tax No. 48/2024/QH15 To determine whether your product or service is eligible for VAT reduction based on the Vietnamese Standard Classification of Industries (VSIC).
- Look up the corresponding commodity code for the names of goods and services at Classification and content of the Vietnamese product classification system (Issued together with Decision No. 43/2018/QD-TTg dated November 1, 2018 of the Prime Minister).
If unsure, businesses can seek advice from local tax authorities or tax consultants.
Step 2: Update the invoicing system:
- For businesses using the VAT deduction methodWhen issuing invoices, the 8% tax rate must be clearly stated in the "Tax Rate" box, including both the VAT amount and the total payment. If the invoice includes both goods/services eligible for tax reduction and those not eligible for tax reduction, the different tax rates must be clearly distinguished as stipulated in Clause 3, Article 1 of Decree 180/2024/ND-CP.
- For businesses using the tax calculation method based on a percentage of revenue.: Clearly state the amount before the discount in the "Total Amount" column. In the "Total Amount of Goods and Services" column, state the amount after the 20% discount and add a note: "Reduced… (amount) by 20% of the percentage rate for calculating value-added tax according to Resolution No. 174/2024/QH15".
Step 3: Adjust the issued invoice:
For invoices issued before the tax reduction policy came into effect, businesses need to adjust them in accordance with the legal regulations on invoices and supporting documents. The seller adjusts the output tax amount, and the buyer adjusts the input tax amount (if any) based on the adjusted invoice.
Step 4: Add regulations when filing monthly/quarterly VAT returns.
Businesses specified in Article 1 of Decree 180/2024/ND-CP shall declare goods and services eligible for value-added tax reduction. Form No. 01 – Declaration of Value Added Tax Reduction according to Resolution No. 174-2024-QH15 In Appendix IV issued together with this Decree, along with the Value Added Tax Declaration Form. 📥 Download Form No. 01 here.
Step 5: Archive the records:
Businesses need to keep complete records of invoices, receipts, and documents related to transactions subject to the 8% VAT rate to facilitate inspections and verifications by the tax authorities.
Summary of steps to follow
|
Step |
Content |
Note |
|
1. Verify eligibility |
Compare goods/services with the Value Added Tax Law No. 48/2024/QH15. |
Ensure the catalog is accurate. |
|
2. Update the invoice. |
Record a tax rate of 8% (deductible) or a 20% reduction (% of revenue). |
Distinguish between tax rates. |
|
3. Adjust the invoice. |
Adjust output/input tax based on issued invoices. |
Comply with the law |
|
4. Additional regulations |
Declare goods and services eligible for VAT reduction. |
According to the Sample number 01Appendix IV |
|
5. Record keeping |
Keep all relevant invoices and documents. |
Ensure transparency during inspections. |
The policy of extending VAT reduction until the end of 2026 is an important measure by the Vietnamese government to support businesses and promote economic growth amidst global uncertainties. Business owners and taxpayers need to understand the regulations, apply the policy effectively, and follow the correct procedures to maximize the benefits of this policy. Compliance with legal requirements and monitoring updates from relevant authorities will help businesses avoid risks and optimize economic benefits.