Vietnam VAT rate updates Jul 2025

The revised VAT regulations in Vietnam introduce comprehensive updates to zero-rated supplies, reduced-rate supplies, and non-eligible supplies, aiming to streamline tax processes and support specific sectors.

Zero-Rated Supplies

The updated list includes goods and services exempt from VAT under specific conditions:

1. Goods:
   • Exported goods consumed outside Vietnam.
   • Domestic goods sold to tax-free zones for consumption within or to support export production.
   • Goods sold in quarantine areas to individuals who have completed exit procedures.
   • Items sold at duty-free shops.
2. Services:
   • Provided directly to foreign organizations/individuals for consumption abroad.
   • Offered to entities in tax-free zones, supporting export production.
   • International transportation.
   • Vehicle rental services for overseas use.
   • Aviation and maritime services for international transportation.
   • Construction and installation outside Vietnam or in tax-free zones.
   • Digital content products and processed export goods, given documented proof of foreign consumption.
3. Spare Parts and Materials:
   • For repairing vehicles and machinery used outside Vietnam.

Reduced VAT Rate (5%) Supplies

The 5% reduced rate applies to a range of essential goods and services to support agriculture, healthcare, education, and other key areas:

1. Agricultural and Basic Products:
   • Clean water (excluding bottled/canned beverages).
   • Fertilizers, plant protection products, animal stimulants.
   • Unprocessed or minimally processed agricultural products.
   • Latex rubber, fishing nets, and handicrafts from agricultural by-products.
2. Healthcare:
   • Medical equipment, medicines, and pharmaceutical products.
3. Education:
   • Teaching aids such as diagrams, models, and traditional performing arts.
4. Other Essential Goods/Services:
   • Offshore fishing vessels.
   • Machinery for agriculture.
   • Social housing as per the Housing Law.
   • Preservation and care of crops.
   • Scientific and technological services.
   • Agricultural canal and lake dredging.

Non-Eligible Supplies

Certain supplies are explicitly excluded from zero-rating, including:

• Technology and intellectual property transfers abroad.
• Reinsurance, credit, and capital transfer services.
• Derivative products.
• Postal/telecom services and specified exports (e.g., tobacco, imported alcohol, and beer).
• Cars and fuel sold to tax-free zones.

This revision clarifies VAT applicability, promotes export-oriented activities, and aligns tax benefits with government priorities in agriculture, healthcare, and education. It also delineates areas excluded from tax incentives to prevent misuse.