Key highlights of Decree 181/2025/NĐ-CP on value-added tax
From July 1, 2025, Decree No. 181/2025/NĐ-CP (“Decree 181”) officially takes effect, providing detailed regulations and guidance on the implementation of the revised Law on Value-Added Tax (“VAT Law”). This Decree plays an important role in in establishing a clear, consistent and transparent legal framework for value-added tax (“VAT”) declaration, deduction, refund and administration, particularly in the context of Vietnam’s increasing digitalization of tax management. This article summarizes key provisions that businesses should pay close attention to in order to ensure full compliance with the new regulations.
1.New rules on conditions for input VAT deduction
According to Clause 2, Article 14 of the 2024 VAT Law and Article 26 of Decree 181, businesses applying the value-added tax credit method may only deduct input VAT if they possess valid VAT invoices and non-cash payment documents for transactions valued from VND 5 million or more (including VAT). Article 26 further clarifies that where a business purchases goods or services multiple times in a single day from the same supplier and the combined value reaches VND 5 million or more, non-cash payment is still required for input VAT deduction to be allowed. Under the 2008 VAT Law, non-cash payment was only required for individual transactions valued at VND 20 million or more. Decree 181 has significantly lowered this threshold to VND 5 million and broadened its application, signaling a strong shift toward tightening control over cash-based transactions in tax administration. Accordingly, businesses should review their payment procedures, update internal accounting policies and ensure compliance with non-cash payment requirements to retain the right to VAT deduction. For more detailed guidance on this topic, please refer to TNTP’s article: Input value-added tax deduction conditions under the 2024 VAT Law.
2.VAT refund policy for goods and services subject to the 5% tax rate
Article 31 of Decree 181 introduces a notable change in VAT refund policy. Specifically, businesses operating only in sectors subject to the 5% VAT rate are entitled to a refund if, over a period of 12 consecutive months or 4 consecutive quarters, their undeducted input VAT amount of the enterprise is greater than or equal to VND 300 million.
Previously, this condition appeared inconsistently across guiding documents issued by the Ministry of Finance and the General Department of Taxation, but it had not been clearly codified in legislation. As a result, even businesses that qualified for refunds often refrained from filing due to concerns about tax inspection risk or rejection of their claims. Decree 181 now formalizes this provision, giving businesses a clear legal basis for claiming VAT refunds.
This policy is especially beneficial for businesses whose outputs are taxed at the lower 5% rate while their inputs are subject to the standard 10% rate. To take advantage of this, businesses should monitor their input VAT balance regularly, prepare complete and accurate accounting records and develop periodic refund plans. Timely refund applications can improve cash flow, reduce capital costs and enhance competitiveness.
3.Business activities on digital platforms of suppliers without a permanent establishment in Vietnam and VAT declaration responsibilities
Decree 181 introduces several notable new provisions related to cross-border e-commerce activities. Specifically, under Point a, Clause 2, Article 3 of Decree 181, e-commerce platforms or digital platforms are responsible for declaring, paying and withholding tax on behalf of foreign suppliers without a permanent establishment in Vietnam that engage in e-commerce or digital platform-based business activities with organizations or individuals in Vietnam. This is a continuation of Vietnam’s policy direction under the Law on Tax Administration, as well as related regulations in Decrees No. 126/2020/NĐ-CP and No. 91/2022/NĐ-CP.
Previously, regulations on tax obligations in e-commerce were primarily directional in nature and the tax declaration responsibilities of intermediary platforms were not clearly defined. As a result, tax management for cross-border services such as advertising, software, electronic games, online learning platforms and other services faced many shortcomings, leading to budget revenue losses and creating inequality between domestic and foreign businesses.
The new rules empower tax authorities with a stronger legal basis to monitor and collect VAT on cross-border digital transactions. Businesses operating via e-commerce platforms or using services from overseas providers should clearly determine the tax responsibilities of each party involved. Additionally, they should retain complete service agreements, electronic invoices and payment records to justify input VAT claims where applicable.
4.Direct VAT calculation method required for gold, silver and gemstone business sector
Decree 181 clearly stipulates that gold, silver and gemstone trading and processing activities must apply the direct VAT calculation method on value added, instead of the credit method used in other sectors. This regulation is specified in Article 22 of Decree 181, aimed at ensuring effective control over a field that has higher tax risks and difficulties in monitoring actual revenue.
While similar restrictions existed previously, practical implementation was inconsistent, especially among multi-sector businesses. Decree 181 now unambiguously requires businesses in this sector to apply the direct method, separating them clearly from businesses eligible for the credit method.
Businesses involved in gold, silver or gemstone trading should maintain separate accounts and avoid combining such activities with other lines of business. Multi-sector enterprises should consider establishing distinct branches or business codes to comply with this VAT treatment. Proper classification and tax method application are essential to avoid future disputes or inspection issues.
Decree 181/2025/NĐ-CP marks a significant advancement in VAT administration and policy reform. It provides clearer rules for deductions and refunds, enhances cross-border tax oversight and highlights technology’s role in tax administration. In response, businesses should thoroughly review their accounting procedures, classify activities based on applicable VAT methods and work with tax advisors to ensure regulatory compliance. Taking action early can help businesses avoid legal and financial risks and make the most of available tax benefits.
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