In Vietnam, a change to what a customer pays affects VAT only when it is documented the way the invoice rules require — usually by an adjusting e-invoice or by showing the reduction on the invoice itself. A trade discount or volume rebate that reduces the price of goods reduces the VAT base. A return of goods reverses the sale. A discount for paying early is generally treated as a financial item, not a price reduction. A credit note from a group system on its own changes nothing for Vietnamese VAT.
Distributors, consumer goods companies and manufacturers with annual price reviews meet these situations every month. The rules sit in Law 48/2024/QH15 on Value Added Tax, Decree 181/2025/ND-CP and the invoice rules — Decree 123/2020/ND-CP as amended by Decree 70/2025/ND-CP, and from 1 July 2026 Decree 254/2026/ND-CP. This guide explains each situation in the terms a sales and finance team uses.
Why the document matters more than the agreement
A rebate agreement between a supplier and a distributor is a valid commercial contract, but the VAT return follows invoices. If the supplier pays a rebate by bank transfer and books it as an expense, while the invoices still show the original price, output VAT stays at the original amount and the distributor keeps its original input VAT. The price reduction exists in the contract and in cash, but not for VAT.
The same is true in the other direction. A distributor that reduces its input VAT without an adjusting invoice from the supplier, or a supplier that reduces its output VAT without issuing one, creates a mismatch the tax authority's system can see, because both sides' invoices are in the same database.
Trade discounts and volume rebates
A trade discount or volume rebate reduces the price of goods sold, so it reduces the taxable value for VAT when documented correctly. The practical question is timing:
| When the discount is known | Usual documentation |
|---|---|
| At the time of sale | Show the discount on the invoice; VAT is calculated on the discounted price |
| After a period, when volume targets are met | Adjust by an adjusting invoice or on a later invoice, in the way the invoice rules allow |
Rebates paid in goods (buy ten, get one free, settled at quarter end) need particular care: they can be a price reduction, a promotion or a gift depending on how the programme is structured and documented. Settle the classification in the distribution agreement.
Early-payment discounts and financial settlements
A discount for paying before the due date is, as a rule, not treated as a reduction of the price of goods. It is a financial arrangement: the seller records it as a financial expense, the buyer as financial income, and neither adjusts VAT. Check the current guidance for the treatment and the documents required, because the distinction is sometimes blurred in contracts that call every reduction a "discount".
Other settlements with no link to specific goods — marketing support payments, listing fees, penalties for late delivery — have their own treatments and are generally not price adjustments either. Some of them are payments for a service the buyer supplies, which means the buyer, not the seller, issues an invoice with VAT. Reading the contract for what the payment really buys is the first step.
Returns of goods
When a buyer returns goods, the sale is reversed in whole or in part. The invoice rules prescribe how the return is documented and by whom — and the procedure has been amended over time, including by Decree 70/2025/ND-CP. Follow the version in force at the time of the return, and make sure both sides document it consistently.
Practical points for FIEs:
- Record the physical return with a delivery note and the reason — defect, wrong item, end of consignment.
- Issue or receive the adjusting document in the period in which the return happens, not at year end.
- For exported goods returned to Vietnam, customs procedures apply and the 0% sale must be reversed with the related documents.
- Returns and replacements that cross legal entities in the group are still supplies between separate taxpayers.
Price changes after the sale and year-end adjustments
Contracts with price review clauses — commodity-linked pricing, cost-plus arrangements, annual true-ups — change the price of goods already invoiced. When the price goes down, the seller issues an adjusting invoice reducing the price and VAT; when it goes up, an adjusting invoice increasing them. Both parties declare the adjustment in the period it is made.
Year-end transfer pricing adjustments within a group are harder. An adjustment that changes the price of specific goods supplied can be documented as a price change. A lump-sum payment to bring a subsidiary's margin into a target range, with no link to specific supplies, may not be a price change for VAT at all. Before booking one, ask how it will be documented on the Vietnamese side and what that means for VAT, CIT and customs value. Decree 255/2026/ND-CP now governs tax administration for enterprises with related-party transactions; have the mechanism reviewed against it.
A worked example with round numbers
Hypothetical example. Suppose a supplier sells goods to a distributor during a quarter for VND 1,000 million before VAT, invoiced at 10%, so VND 100 million of output VAT. The distribution agreement grants a 5% volume rebate if quarterly purchases reach that level, settled after quarter end.
- If the supplier issues an adjusting invoice (or applies the reduction on a later invoice, as the rules allow) for VND 50 million, output VAT falls by VND 5 million, and the distributor reduces its input VAT by the same VND 5 million.
- If the supplier instead pays VND 50 million by bank transfer and books it as a sales expense with no adjusting document, its output VAT stays at VND 100 million, the distributor keeps VND 100 million of input VAT, and the distributor's receipt of VND 50 million has to be explained in its own books.
The first route matches the commercial reality and both parties' VAT returns. The second leaves a VND 5 million difference that neither party's return reflects correctly, repeated every quarter across every distributor. Most rebate disputes with the tax authority are versions of the second route.
What the distribution agreement should settle
- Which reductions are price reductions (trade discounts, volume rebates) and which are financial (early-payment discounts).
- How and when each reduction will be documented — on the invoice, by an adjusting invoice, or on a later invoice.
- Which payments are for services supplied by the distributor — display, promotion, logistics — and will be invoiced by the distributor with VAT.
- How returns are handled and who issues which document.
- Who bears the tax cost if a reduction is not documented correctly.
Group credit notes and systems
Many foreign groups issue credit notes from a central system. In Vietnam, a credit note is not an e-invoice and does not by itself adjust VAT. The local entity needs the Vietnamese adjusting e-invoice, issued through the tax authority's system in the format the rules require.
Set up the ERP so that a credit note raised centrally for a Vietnamese customer triggers the local adjusting invoice, and so that a rebate accrual in the ledger is matched to the adjusting documents that will eventually support it. Month-end reconciliation between the credit note register and the adjusting e-invoices is the simplest control.
Where to check your own position
The e-invoice portal shows both the original invoices and the adjusting invoices issued to and by your company; compare them with your rebate and returns registers. Your company's e-tax account shows the VAT returns in which the adjustments were declared. If a customer's records and yours disagree on an adjustment, the tax authority can see the same disagreement.
Frequently asked questions
Does a volume rebate paid in cash reduce our output VAT?
Only if it is documented as a price reduction the way the invoice rules require, usually by an adjusting invoice or on a later invoice. A cash payment booked as an expense without that document does not reduce output VAT.
Is an early-payment discount a price reduction for VAT?
Generally no. It is treated as a financial item, so neither side adjusts VAT. Check the current guidance and make sure the contract describes it clearly.
Our parent issued a credit note for a pricing error. Is that enough?
Not for Vietnamese VAT. The Vietnamese seller must issue an adjusting e-invoice through the tax authority's system. The credit note can support the adjustment but does not replace it.
Who documents a return of goods?
The invoice rules prescribe the procedure, which has been amended over time. Follow the version in force at the time of the return and agree it with the other party so that both sides record it the same way.
Does a year-end transfer pricing adjustment carry VAT?
It depends on whether it is a price change for specific supplies or a lump-sum margin adjustment. Review the mechanism with your adviser before booking it, including its customs and CIT consequences.
A distributor charges us a listing fee. Is that a discount?
Usually not. A fee for a service the distributor provides, such as shelf placement or promotion, is generally a supply by the distributor, invoiced with VAT, rather than a reduction in your selling price.
