Vietnam collects value added tax under Law 48/2024/QH15 on Value Added Tax, in force from 1 July 2025. For a foreign-invested enterprise (FIE) the basic mechanics are familiar from other VAT systems: you charge output VAT on sales, you credit input VAT on purchases, and you pay the difference. The rates are 0%, 5% and 10%.
What catches regional finance teams is not the design but the detail: VAT arises at dates that do not always match revenue recognition, input VAT is only creditable when the paperwork and the payment trail are right, and a Vietnamese e-invoice is the document everything else hangs on. This guide walks through those points in the order an FIE usually meets them.
The documents that govern VAT
The law sets the principles: what is taxable, what is exempt from VAT, the rates, the credit method and the refund cases. The working detail sits in Decree 181/2025/ND-CP, which guides the VAT law, and in Ministry of Finance guidance. Invoicing is regulated separately: Decree 123/2020/ND-CP as amended by Decree 70/2025/ND-CP, and from 1 July 2026 Decree 254/2026/ND-CP on invoices and electronic documents together with Circular 91/2026/TT-BTC. Filing, payment and deadlines follow the Law on Tax Administration (Law 38/2019/QH14) and its implementing documents, including Decree 252/2026/ND-CP and Circular 89/2026/TT-BTC.
We cite the 2026 documents by name and scope only. Before relying on a particular procedure from them, read the text itself or ask your adviser to confirm how it applies. When someone in the group refers to "the VAT decree", ask which one: Vietnamese documents are identified by number, year and issuing body, and short numbers repeat across years.
Three rates, a reduction policy and the difference between 0% and exempt
| Rate | Typical scope |
|---|---|
| 0% | Exported goods and services consumed outside Vietnam, international transport and certain other supplies, subject to documentary conditions |
| 5% | Goods and services on the reduced-rate list, such as certain essential and agricultural items |
| 10% | Everything not on the 0% or 5% lists — the default rate |
On top of the statutory rates, the National Assembly has at times approved a 2% reduction for certain groups of goods and services by resolution, with exclusion lists for sectors such as telecoms, financial services and real estate. Whether a reduction applies to a given period, and to which products, is set by the resolution and its implementing decree for that period. Check the current resolution before you configure your invoicing system; do not carry last year's setting forward.
Keep a clear line between 0% and not subject to VAT. A 0% supply is a taxable supply: you can credit the related input VAT and, in qualifying cases, claim a refund. A supply that is not subject to VAT — some financial and credit services, for example — carries no output VAT, and input VAT attributable to it is not creditable. Getting the classification wrong in either direction changes your input credit, not only your output.
The credit method and who actually pays
FIEs almost always use the credit method: output VAT on sales minus creditable input VAT on purchases. The direct method, which applies a rate to value added or revenue, is for narrow cases and small operators, not for a typical subsidiary.
Three flows reach the VAT return of an FIE:
- Domestic sales and purchases, documented by e-invoices issued through the tax authority's system.
- Imports. VAT is collected by customs at import. The import VAT paid, supported by the customs declaration and payment evidence, becomes creditable input VAT.
- Services bought from overseas. When a foreign company without a taxable presence in Vietnam supplies services to you, VAT is generally withheld and paid by the Vietnamese payer under the foreign contractor rules. The VAT you withheld and paid can then be credited, provided the documents are complete.
The third flow is where many groups under-comply: management fees, IT support and licence charges from the parent arrive as foreign invoices, are paid gross, and the Vietnamese VAT is never declared. That is both a VAT exposure and, as a rule, a problem for deducting the underlying cost for CIT.
When VAT arises: timing that differs from your revenue policy
VAT is triggered by legal events, not by the accounting standard your group reports under. For goods, the main trigger is the transfer of ownership or right to use, regardless of whether payment has been received. For services, it is completion of the service or the time the invoice is issued, whichever the rules specify for that type of service; advance payments for services can trigger VAT when received. Construction, utilities and some continuous supplies have their own rules.
Timing differences show up in three predictable places:
- Deliveries at month end where goods leave the warehouse on the 30th but the group recognises revenue on customer acceptance a week later. VAT follows the delivery and the invoice, not the acceptance.
- Long service contracts recognised over time for reporting but invoiced by milestone. Match each milestone to an invoice, and invoice when the milestone is completed.
- Deposits and prepayments. Treat them according to the VAT rules for that supply, not according to where they sit on the balance sheet.
If your ERP issues invoices on the revenue-recognition date, map it against these triggers before the first filing, not after the first tax audit.
Input credit in brief
Input VAT is creditable when it relates to taxable supplies and is supported by a lawful VAT invoice (or the import documents), and — for purchases where the invoice is VND 5 million or more — by evidence of non-cash payment, as required by Law 48/2024/QH15. For imported goods, the customs documents and evidence of VAT paid at import take the place of the invoice.
Most disallowed credits trace back to routine failures rather than disputes about the law: a supplier invoice with the wrong buyer name or tax code, a purchase paid partly in cash, a payment made by a group company rather than the Vietnamese entity, or an invoice from a supplier whose tax code status later shows it was not operating at its registered address. Accounts payable should check the invoice against the purchase order, confirm the supplier's status and make sure the payment comes from the company's own bank account. A deeper look at each condition is on our sister site KhauTru.com (in Vietnamese).
Filing, payment and the monthly or quarterly question
VAT is declared monthly or quarterly. Larger businesses declare monthly; smaller businesses and newly started ones may declare quarterly under criteria set in the tax administration rules. Check the criteria in force when the company registers and each year afterwards, because moving across the line changes the filing cycle from the following year.
| Cycle | Return and payment due |
|---|---|
| Monthly | 20th day of the following month |
| Quarterly | Last day of the first month of the following quarter |
These dates follow the Law on Tax Administration; confirm them against any new guidance issued in 2026. Late payment attracts late-payment interest calculated daily on the amount paid late — long set at 0.03% per day; check the rate currently in force. Errors in an earlier return are corrected with a supplementary declaration. Doing that before the tax office raises the point is almost always cheaper than waiting.
Where group processes break
- Tax codes in the ERP. A global template with a single "standard" code cannot express 0%, 5%, 10%, not-subject and a temporary reduction. Build the Vietnamese codes explicitly.
- Credit notes from headquarters. A price adjustment agreed at group level still needs a Vietnamese adjusting e-invoice on the local side. A credit note from the parent does not reduce your output VAT on its own.
- Free goods, samples and promotions. Goods given away can carry output VAT unless they fall within the promotion rules and the procedure was followed. Check before the campaign, not after.
- Intercompany recharges. A recharge from a sister company in Vietnam needs an e-invoice with VAT like any other domestic supply.
- Payment by the wrong entity. If the regional treasury pays a Vietnamese supplier on your behalf, the non-cash payment condition becomes hard to evidence.
Where to check your own position
Three places show what the tax authority already knows. The taxpayer information lookup gives your registration status and managing tax office. Your company's e-tax account shows returns filed, payments recorded and amounts the system treats as outstanding. The e-invoice portal lets you see the invoices issued to your tax code by suppliers and the invoices you issued — compare it with your purchase ledger every month. Since 1 July 2025, tax administration works in three tiers: the Tax Department, provincial and city tax offices, and grassroots tax offices; the lookup tells you which one manages your company.
Frequently asked questions
Is the standard VAT rate in Vietnam 10%?
Yes. 10% is the default rate for goods and services not listed at 0% or 5%. A temporary 2% reduction for certain goods may apply in some periods under a National Assembly resolution; check whether one is in force for your period and products.
Do we charge VAT on services to our overseas parent?
Services supplied to an overseas organisation and consumed outside Vietnam can qualify for 0%, subject to the contract, payment and other conditions. Services consumed in Vietnam do not qualify even if the customer is foreign. Document where the service is used.
Can we credit VAT on a purchase paid in cash?
For invoices of VND 5 million or more, input VAT is creditable only with evidence of non-cash payment under Law 48/2024/QH15. Below that level, the invoice and other conditions still apply.
Who declares VAT on a management fee charged by our parent company?
Where the parent has no taxable presence in Vietnam, the Vietnamese company generally withholds and pays VAT and CIT under the foreign contractor rules. The VAT withheld and paid can then be credited if the documents are complete.
Should a new FIE file VAT monthly or quarterly?
Newly started businesses may generally declare quarterly, and larger ones monthly, under criteria in the tax administration rules. Check the current criteria and confirm the cycle registered for your company in the e-tax account.
What happens if we find an error in a return we filed last year?
File a supplementary declaration correcting the period and pay any extra tax with late-payment interest. Correcting before the tax office raises the issue keeps the consequences smaller.
