The 2024 Law on Value Added Tax (effective from 01 July 2025)

10 September, 2025 | TNTP LAW | Legal newsletter

The 2024 Law on Value Added Tax, passed by the National Assembly on 26 November 2024, shall officially come into force on 01 July 2025. With several substantive revisions regarding tax rates, taxable entities, conditions for input VAT credit, and VAT refund, the new Law is expected to have direct implications for the business operations of both domestic and foreign enterprises. This article by TNTP provides an overview of key noteworthy changes introduced by the 2024 Law on Value Added Tax.

1.Expanded definition of taxpayers

The 2024 Law on Value Added Tax significantly expands the scope of VAT taxpayers, with a particular focus on e-commerce and digital platform activities. Article 4 introduces new categories of taxpayers, including:

Foreign suppliers without a permanent establishment in Vietnam conducting e-commerce or digital-based business with organizations or individuals in Vietnam;
Foreign digital platform managers that are responsible for withholding and paying VAT on behalf of foreign suppliers;
Vietnam-based business entities applying the credit method for VAT calculation that purchase services from foreign suppliers without a permanent establishment in Vietnam through e-commerce or digital platforms must withhold and pay VAT on behalf of such suppliers;
Organizations operating e-commerce platforms or digital platforms with payment functions that withhold and declare VAT on behalf of business households and individuals trading on such platforms.

2.Adjustments regarding VAT-Exempt entities

Article 5 of the 2024 Law on Value Added Tax revises the list of goods and services not subject to VAT under the 2008 Law on Value Added Tax, with specific changes as follows:

Removal of certain goods and services previously exempt from VAT under the 2008 Law on Value Added Tax, including:
Fertilizers; specialized machinery and equipment used for agricultural production; offshore fishing vessels;
Securities custody services; market organization services provided by stock exchanges or securities trading centers; other securities business activities;
Exported products that are processed from mined natural resources and minerals are now subject to VAT unless listed as exempt under a specific Schedule issued by the Government.
Addition of new VAT-exempt categories, including imported goods used for humanitarian aid, disaster relief, epidemic prevention, or war recovery, as prescribed by the Government.

3.Adjustment of VAT rates for specific goods and services

The 2024 Law on Value Added Tax introduces significant changes to VAT rates for various goods and services, aiming to optimize the tax structure and enhance budget revenue efficiency.

According to Article 9 of the 2024 Law on Value Added Tax, the applicable VAT rates for certain goods and services have been revised as follows:

For the 0% VAT Rate: The scope of the 0% VAT rate has been expanded to cover additional categories of exported goods and services under the 2024 Law on Value Added Tax, including:
International transportation services;
Export services such as leasing of means of transport for overseas use; aviation and maritime services directly serving international transport (or via agents);
Construction and installation works performed abroad or in non-tariff zones;
Goods sold in restricted areas to outbound passengers (foreigners or Vietnamese) or at duty-free shops;
For the 5% VAT rate: Several items previously VAT-exempt are now subject to 5%, including:
Fertilizers;
Offshore fishing vessels.
For the 10% VAT rate: Some items previously taxed at 5% under Article 8 of the 2008 Law on Value Added Tax are now subject to 10%, including:
Unprocessed forest products;
Sugar and its by-products (molasses, bagasse, filter mud);
Specialized equipment and tools for teaching, research, and scientific experiments;
Cultural, exhibition, physical training, and sports activities; performing arts; film production, import, distribution, and screening.

4.Revisions to conditions for input VAT Credit

Article 14 of the 2024 Law on Value Added Tax makes important changes to the criteria for claiming input VAT credits, including:

Under the 2008 Law on Value Added Tax, goods and services with a value below VND 20 million per purchase were not required to have evidence of non-cash payment to be eligible for input VAT credit. The new law requires evidence of non-cash payment for all purchases, except for specific exemptions to be determined by the Government.
New forms of documentation have been added to support input VAT credit claims, particularly for export activities. These include: Packing lists, bills of lading, and cargo insurance documents for exported goods and services.

The elimination of the VND 20 million cash payment threshold is expected to significantly influence business payment practices. Enterprises will need to shift to electronic payment methods, such as bank transfers, to ensure VAT credit eligibility.

Moreover, the inclusion of additional export-related documents for VAT credit purposes provides practical support for exporters and reduces financial burdens. Exporters should proactively prepare these documents to fully benefit from input VAT credits under the new provisions.

5.Additional VAT refund scenarios

Clause 3, Article 15 of the 2024 Law on Value Added Tax introduces a new scenario for VAT refund eligibility. Specifically, business establishments that, during a month or quarter, export goods or services and have accumulated input VAT credits of VND 300 million or more (that have not yet been fully credited) are entitled to a VAT refund for that month or quarter, except in cases where goods are imported and then re-exported.

This new regulation is particularly beneficial for export enterprises, as it facilitates faster capital recovery, improves cash flow, and enhances financial capacity. The broader refund policy is expected to provide practical support to exporters.

The above is TNTP’s summary of “The 2024 Law on Value Added Tax” (effective from 01 July 2025). We hope the information is helpful to readers. Should you have any questions or require legal support, please do not hesitate to contact TNTP for timely assistance.

Best regards,