VAT in 2025 has many new points that businesses need to pay special attention to, from changes in tax rates, applicable subjects to declaration and deduction conditions. For example, according to the new regulations, a trading company in Hanoi with a revenue of VND10 billion/year can save up to VND300 million in taxes thanks to the temporary tax rate reduction policy. These changes not only help reduce the cost burden for businesses but also create more motivation to promote consumption and investment in the context of economic recovery.
See more articles at: VAT Overview – MAN
Overview of VAT in 2025
According to Law on VAT 2024 (48/2024/QH15) Effective from 01/07/2025, important provisions include:
What is VAT?
Value added tax (or VAT) is an indirect tax, calculated on the added value of goods and services from production, circulation to final consumption. Consumers are the taxable subjects, while businesses play the role of collecting on behalf of the State..
To understand better, you can see more articles: What is VAT? Subjects subject to VAT in 2025.
VAT taxable subjects in 2025
The scope of tax in 2025 is very wide. Almost all consumer goods and services in Vietnam are subject to tax, except for some exempted groups such as healthcare services, public education, life insurance, credit, etc. Thus, VAT in 2025 continues to play the role of a common indirect tax, directly affecting both businesses and consumers.
See more articles at: VAT Subjects – MAN
VAT rate in 2025
The new law stipulates four tax rates, including 0%, 5%, 8% and 10%, applied depending on each specific type of goods and services. For example, exported goods are subject to rate 0%, some essential goods are subject to 5% or 8%, while most common consumer products are subject to rate 10%. Correct application of VAT rates in 2025 is an important factor for businesses to avoid the risk of being charged and fined.
| VAT RATE 2025 | SUBJECTS OF VAT RATE APPLICATION IN 2025 |
| 0% | Export of goods and services abroad; international transportation |
| 5% | Some essential goods: clean water, fertilizer, medical equipment, books, unprocessed food |
| 8% | Most goods and services were previously subject to 10%, except for groups that were not subject to reduction (such as telecommunications, finance-banking, real estate, metals, mining products, alcohol, tobacco, etc.) |
| 10% | The remaining goods and services are not included in 0%, 5%, 8% |
For more details on how to apply tax rates, you can see the article: VAT tax rates and corresponding taxable subjects in 2025 – VN Tax
VAT calculation method in 2025
In 2025, there are two main calculation methods for VAT. The first is the deduction method, usually applied to large-scale enterprises using electronic invoices and a complete accounting system. The second is the direct method on VAT, for business households, individuals or small businesses. Choosing the right method not only helps businesses comply with regulations but also optimizes tax obligations.
See more articles at: Direct VAT calculation method
New points in the VAT Law 2025
VAT policy from 2025 marks an important shift. Some notable changes include:
Adjusting VAT rates
One of the biggest changes in VAT in 2025 is the change in tax rates for some groups of goods and services. Some items previously subject to 5% will be transferred to 8%, in line with the roadmap for indirect tax reform to expand the tax base and reduce the gap between groups.
According to the National Assembly Resolution of June 2024, the tax reduction from 10% to 8% for many items (period 2025-2026) is to support consumption and businesses in the context of global economic difficulties. This is a temporary policy, but has a direct impact on the pricing strategy and input costs of businesses.
See more articles at: VAT Rate – MAN
New regulations on input tax deduction
The 2025 VAT Law adds conditions for input VAT deduction. Enterprises can only deduct when they have legal electronic invoices and non-cash payment documents for transactions over VND 20 million. This is to limit invoice fraud and increase transparency in business operations.
For example: If a business purchases raw materials worth VND 200 million but pays in cash, according to VAT 2025, it will not be able to deduct input VAT, even if the invoice is valid.
If you want to understand more about deductions in tax declarations and new changes applied from 2025, please refer to the article: What is VAT deduction? Some latest related regulations 2025
Expanding the tax-exempt population
VAT in 2025 also adds some public services such as medical waste treatment, social security services paid by the State... to the list of non-taxable services. This is a move to encourage essential service providers to reduce costs, supporting people to access more easily.
Increase the application of electronic invoices
From January 1, 2025, all businesses and business households are required to use electronic invoices with authentication codes from the tax authorities. This is a core regulation in VAT 2025, to completely digitize the process of declaring, deducting and paying VAT in 2025.
| CONTENT | BEFORE 2025 | VAT 2025 |
| Goods tax rate (before 10%) | 10% | 8%(except exclusion group) |
| Input deduction conditions | Invoice + payment not required via bank | Electronic invoice + bank payment (>20 million) |
| Non-taxable entities | Narrower (mainly education, basic health) | Expanding public services and social security |
| Electronic invoice | Encourage application | Required for all businesses and business households |
See more articles at: VAT Invoice – MAN
Risk management mechanism in VAT refund
According to VAT 2025, tax authorities are authorized to classify tax refund dossiers according to risk level. Files in the “high risk” group will be inspected before tax refund.
This may extend the tax refund period for some businesses, but helps limit the situation of incorrect tax refunds.
See more articles at: VAT Refund – MAN
Impact of VAT in 2025 on businesses and the economy.
For business
Changes in VAT in 2025 create both opportunities and challenges. Adjustments to tax rates, exemptions, or input deduction regulations force businesses to review their accounting systems, contracts, and financial plans.
Application VAT 2025 will have different impacts on each group of businesses:
- Manufacturing and trading enterprises: Input costs may fluctuate as some items subject to 10% are reduced to 8% in 2025–2026, while items subject to 5% remain the same.
- Public service enterprise: Benefit from the addition of non-taxable entities.
- Businesses use multiple invoices: Must strictly comply with regulations on electronic invoices and cashless payments.
Some essential manufacturing and service industries, thanks to the preferential tax rate of 5%, will have more room to reduce costs, thereby increasing competitiveness. Meanwhile, most industries that are subject to tax rate 10% will only be temporarily reduced to 8% in the period 2025-2026. After the reduction policy expires, the tax rate may return to 10%, putting great pressure on small and medium-sized enterprises that are already facing difficulties in capital.
For the economy
VAT in 2025 is expected to contribute to expanding budget revenue sources and ensuring macroeconomic stability. According to the Ministry of Finance, VAT currently accounts for more than 30% of total revenue from indirect taxes, an important resource for public investment. At the same time, adjusting policies in line with integration commitments also helps create a fairer playing field for domestic and FDI enterprises.
However, the short-term impact could put pressure on consumers as prices for some items increase with the tax rate. This would require accompanying policies, such as social security support or tax extensions for small businesses, to avoid reducing purchasing power during a period of economic uncertainty.
Recommendations for businesses in the context of VAT in 2025
To adapt well to VAT in 2025, businesses need to prepare synchronous solutions:
Proactively update and comply with new regulations
Enterprises need to regularly monitor the documents guiding the implementation of the 2025 VAT Law issued by the Ministry of Finance and the General Department of Taxation. Understanding the regulations will help limit errors in declaration, deduction and refund. If not updated promptly, enterprises may face risks of administrative sanctions according to Decree 125/2020/ND-CP.
Tightly manage electronic invoices
With the mandatory requirement to apply electronic invoices with authentication codes from July 1, 2025, businesses need to invest in appropriate software systems. This helps to better control output and input, reducing the risk of errors and fraud. At the same time, a scientific storage system also supports businesses when subject to tax inspections.
Increase transparency in payments
According to the new regulations, to deduct input VAT for transactions of VND20 million or more, businesses must pay via bank. Therefore, it is necessary to limit cash payments, at the same time, build a strict cash flow control process, and ensure complete accounting documents.
Forecasting cost impact and pricing adjustments
In the 2025–2026 period, the reduction of the majority of goods and services currently subject to the 10% tax rate to 8% will give businesses more room to cut costs. However, groups of goods and services that are not subject to the reduction or that only maintain the 5% rate will not benefit, leading to differences in the level of impact between industries. Retail businesses need to transparently communicate with customers about changes in VAT policy in 2025 to maintain trust.
Proactively prepare tax refund documents
With the new risk management mechanism, VAT refund dossiers will be classified according to the level of risk. Enterprises need to prepare clear and legal documents to minimize the possibility of being classified in the “high risk” group. This not only shortens the time waiting for tax refunds but also avoids disputes with tax authorities.
Training of accounting team and legal department
Changes in VAT in 2025 require accounting teams to master the process of declaration, deduction, and refund. Businesses should organize periodic training and coordinate with tax consultants to reduce legal risks.
Take advantage of opportunities from digital transformation
The comprehensive application of electronic invoices is not only to comply with regulations, but also an opportunity for businesses to accelerate digital transformation in management. Integrating ERP systems, accounting software, and electronic payment gateways will help optimize operations and increase long-term competitiveness.
Conclude
VAT 2025 is not just a technical adjustment of tax, but also a step forward in modernizing the public financial management system. Changes in tax rates, e-invoices and deduction regulations all have a direct impact on costs, profits and business strategies of enterprises.
To adapt, businesses need to prepare early: update policies, invest in technology and ensure transparency in financial operations. This initiative not only helps reduce legal risks, but also creates long-term competitive advantages in a volatile market. In general, VAT in 2025 is both a challenge and an opportunity for businesses to improve their management systems, while contributing to building a transparent and sustainable business environment.
If your business wants to ensure full compliance with the new VAT deduction regulations, from setting up a voucher accounting process to effectively handling errors, MAN – Master Accountant Network always ready to accompany you. With sharp critical thinking, updated tax law expertise, and modern accounting management tools, MAN is committed to optimizing tax obligations and increasing financial efficiency for businesses. Contact MAN today to receive accurate, economical and effective VAT deduction solutions.
Contact information:
MAN – Master Accountant Network
- Address: No. 19A, Street 43, Tan Thuan Ward, Ho Chi Minh City
- Hotline: 0903 963 163 – 0903 428 622
- E-mail: man@man.net.vn
