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Vietnam's 2024 Law on Value-Added Tax (VAT), approved on November 26th, 2024, by the National Assembly of Vietnam, marks an important step in reforming the country's tax framework. The law reflects Vietnam’s effort to align its economic policies with global standards, aiming to support local businesses and consumers. The 2024 VAT Law will take effect on July 1st, 2025.
The VAT Law introduces significant reforms to Vietnam’s tax system, with key updates outlined in Draft No. 5, the latest version. These changes include adjustments to the list of goods and services exempt from VAT under Article 5 of the VAT Law No. 13/2008/QH12, as amended by Laws No. 31/2013/QH13 and No. 106/2016/QH13.
Several categories previously exempt from VAT will now be subject to taxation. These include fertilizers, specialized agricultural machinery, offshore fishing vessels, securities custody services, stock exchange market organization services, and other securities business activities. Exported products made from natural resources and minerals are no longer VAT-exempt if further processed into other products. However, these products must comply with a government-regulated list. Under current regulations, products are VAT-exempt if the combined value of natural resources, minerals, and energy costs accounts for 51% or more of their production cost. The draft also adds imported goods donated for disaster prevention, disease control, or war relief to the VAT-exempt list.
Article 14 introduces a new provision for VAT refunds. Businesses solely engaged in producing goods or providing services subject to a 5% VAT rate can claim refunds if their uncredited input VAT exceeds 300 million VND after 12 months or 4 quarters.
Other amendments in the draft include revisions to the taxable value of imported goods, adjustments VAT rates for specific goods and services, and inclusion of taxable values for goods and services used for promotional purposes.
The 2024 VAT Law also includes measures to address taxation in the rapidly growing e-commerce sector. Cross-border e-commerce platforms and digital service providers, which previously operated in tax grey areas, will now be subject to VAT regulations. This update ensures that all entities contributing to Vietnam’s digital economy share the tax burden equally.
The updated VAT Law is expected to strengthen government revenues while maintaining stable economic growth. Foreign investors are likely to view these changes optimistically, as they signal Vietnam’s commitment to creating a stable and predictable tax environment. For consumers, exemptions and reduced tax rates for essential goods ensure that economic progress does not compromise basic affordability. By focusing on equity and efficiency, the law reflects Vietnam’s broader socioeconomic goals.
Despite its optimistic outlook, the law’s implementation poses certain challenges. Businesses may need time to adapt to the updated requirements, and the government must invest in training and resources to ensure a smooth transition. Additionally, the application of digital tax regulations will require robust infrastructure and ongoing supervision.
The 2024 VAT Law represents an important step toward a modernized tax system in Vietnam. As the country prepares for the law’s implementation in mid-2025, businesses, policymakers, and consumers will play a crucial role in ensuring its success. This reform not only aims to support economic development but also underscores Vietnam’s dedication to fostering a fair and transparent tax environment.
PHC Advisory is a company of DP Group: an international professional services conglomerate of companies with approximately 100 experienced professionals worldwide. We offer comprehensive services in tax, accounting, and financial consulting, including financial supervision, financial audit, internal audit, internal control over financial reporting, and support for audited financial statements and annual audits, ensuring clients' financial transparency and compliance.
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