Decree 181/2025: New VAT Law Guidance with Continued 8% Rate Through 2026
Decree 181/2025/ND-CP, issued July 1, 2025, provides detailed guidance for Vietnam's new VAT Law. The standard 10% VAT rate continues to be reduced to 8% through December 31, 2026, supporting economic recovery. Key changes include a stricter non-cash payment threshold of VND 5 million (down from VND 20 million) for input VAT deduction eligibility, expanded VAT exemptions for imported unprocessed goods, and clearer definitions of the 5% reduced rate categories.
Key Provisions
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8% VAT Rate Extended: The 2% reduction from the standard 10% rate continues through December 31, 2026, covering most goods and services except telecommunications, financial services, banking, securities, insurance, real estate, metals, and mining.
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Non-Cash Payment Threshold: Businesses must provide non-cash payment documentation for transactions of VND 5 million or more (inclusive of VAT) to be eligible for input VAT deduction. This threshold was decreased from VND 20 million.
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Expanded Exemptions: The decree clarifies and expands the scope of VAT-exempt goods and services, particularly for imported goods that are unprocessed or subject to minimal processing.
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5% Rate Clarification: While the 2024 VAT Law listed general categories subject to the 5% rate, Decree 181 specifies these categories in detail.
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0% Rate Application: Updated guidance on when the 0% VAT rate applies, including conditions for VAT credit and refunds.