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Introduction
On June 17, 2025, with the support of 94.56% of voting members, the National Assembly officially adopted a resolution to reduce the standard Value‑Added Tax (VAT) rate from 10% to 8%. This strategic adjustment aims to stimulate production and consumption, support businesses and households, and sustain Vietnam’s growth momentum through the second half of 2025 and into 2026. This guide unpacks the key points of the policy, outlines your compliance obligations, and answers frequently asked questions to ensure you’re fully prepared.
Key Highlights
- VAT Rate Cut: 10% → 8%
- Applicable Goods & Services: Those listed in Clause 3, Article 9 of VAT Law 48/2024/QH15 (e.g. manufacturing, retail, logistics, IT services).
- Exceptions: Telecommunications; financial‑banking; securities; insurance; real estate; metal & mining products (except coal); special‑consumption goods/services (except gasoline).
- Effective Period: July 1, 2025 – December 31, 2026.
- Budget Impact: Estimated revenue loss of VND 39.54 trillion in H2 2025 and VND 82.2 trillion in 2026 (total VND 121.74 trillion).
1. Legal Basis
- Resolution of the National Assembly: Adoption on June 17, 2025, to temporarily reduce the VAT rate.
- VAT Law 48/2024/QH15: Specifies subjects and rates; Clause 3, Article 9 lists the goods/services now enjoying the reduced rate.
- Previous Decree 180/2024/NĐ‑CP: Provided a similar 2% cut for January 1 – June 30, 2025.
2. Scope of Reduction
The recent resolution carefully delineates which goods and services see their VAT rate fall from 10% to 8%. In practice, this means most manufacturing, wholesale and retail activities—the very engines of everyday commerce—will benefit from the lighter burden. Transportation and logistics services, newly included in the list of eligible sectors, can now pass on cost savings to shippers and end‑users alike. Likewise, IT and software services join the reduction cohort, acknowledging the strategic role of Vietnam’s burgeoning tech industry. On the other hand, certain industries remain outside this preferential scope: telecommunications, financial‑banking services (including securities, insurance and related activities), real estate transactions, metal and mining products (with the sole exception of coal), plus a handful of special‑consumption goods and services. Notably, gasoline—a perennial fiscal lever—continues to enjoy the reduced rate, ensuring broad consumer impact.
| Category | Previous Rate | New Rate | Notes |
| Manufacturing & Wholesale/Retail | 10% | 8% | Standard goods and services |
| Transportation & Logistics | 10% | 8% | Newly included in this resolution |
| IT & Software Services | 10% | 8% | Newly included |
| Telecommunications; Finance & Banks | 10% | N/A | Not eligible for reduction |
| Real Estate | 10% | N/A | Not eligible |
| Special‑Consumption Products | 10% | 8% | Exception: gasoline retains reduction |
3. Implementation Timeline
While policy changes often come with tight deadlines, this time, businesses are granted a welcome window to prepare. The new 8% VAT rate officially takes effect on July 1, 2025, and will apply through December 31, 2026. This gives companies several weeks—not just to react, but to prepare thoughtfully and thoroughly.
Between now and the effective date, businesses should begin by updating their accounting and invoicing systems to reflect the new rate. Equally important is ensuring that internal teams—especially finance and sales—understand how the changes apply in practice: which goods and services are eligible, and which remain at 10%.
It’s also wise to review any open quotes, contracts, or purchase orders that extend beyond July 1. If they still reflect the 10% rate where the 8% rate should apply, adjustments should be made in advance to avoid confusion—or worse, non-compliance.
We recommend treating this as an opportunity to get ahead, not just a deadline to meet. Taking early action can help your business avoid last-minute system issues, reduce operational disruption, and ensure that your compliance is smooth and stress-free when the new rate kicks in at midnight on June 30.
| Action | Deadline/Date |
| National Assembly resolution takes effect | July 1, 2025 |
| Period of reduced VAT rate | July 1, 2025 – Dec 31, 2026 |
| Businesses must update billing and accounting systems | Before July 1, 2025 |
4. Impacts on Government Budget
Naturally, a reduction in VAT comes with fiscal implications. The government is projected to absorb an estimated revenue shortfall of VND 39.54 trillion in the second half of 2025, followed by an additional VND 82.2 trillion throughout 2026. In total, the cumulative impact on state revenue is expected to reach VND 121.74 trillion over the full course of the policy period.
However, this short-term budget impact is part of a broader economic strategy. By easing the tax burden on businesses and consumers, the government aims to stimulate production, consumption, and market demand, with the expectation that increased economic activity will help offset the losses through growth in other tax channels.
To support this approach, complementary measures are being implemented—most notably, tightened fiscal discipline, accelerated digitalization of tax administration (including the widespread use of e-invoices and certified cash registers), and strategic deployment of reserve funds to cover urgent and essential expenditures. These steps reflect a commitment to ensuring that the VAT reduction serves as both a stimulus and a sustainable component of broader fiscal planning.
Offset Measures:
- Strengthening tax administration and digitization (e‑invoices via cash registers)
- Tightening budget expenditure and leveraging reserves for urgent needs
- Pursuing GDP growth of ≥ 8% in 2025 to generate offsetting revenue
5. Compliance Checklist
With the VAT reduction set to take effect on July 1, 2025, businesses have a valuable opportunity—not only to ensure compliance but also to align operations for maximum benefit. So, what should your next steps look like?
Start by updating your accounting and invoicing systems to apply the new 8% rate accurately. This technical update may seem straightforward, but implementing it early can help prevent costly errors down the line.
Next, we recommend conducting a focused training session with your finance and sales teams. Make sure your staff understands which goods and services are eligible for the reduced rate—and just as importantly, which are not. A clear internal understanding now can save time and mitigate risk later.
In parallel, carry out a quick review of all active contracts, quotations, and purchase orders. Any documents that stretch across July 1 and still reference the old 10% VAT should be updated promptly to reflect the new rate. These small administrative steps are key to avoiding regulatory issues or disputes with clients.
Don’t overlook documentation. Keep detailed records of how VAT was applied across your transactions, as this will be essential in the event of an audit. Proper recordkeeping remains one of the most effective safeguards against compliance concerns.
Finally, it’s important to communicate the change proactively to your customers and stakeholders. Clear, timely updates about pricing, invoicing, or billing changes will help manage expectations—and reinforce your professionalism in handling the transition.
Taken together, these actions will not only help your business meet regulatory requirements with confidence, but also position you to benefit fully from the cost efficiencies that the VAT reduction is intended to unlock.
6. Frequently Asked Questions
Q1: Do exempt activities (e.g. education, healthcare) need any adjustment?
A1: No—services already exempt (0% rate) under VAT Law remain unchanged.
Q2: What if I mistakenly issue a 10% invoice after July 1?
A2: You should issue a corrective invoice immediately, applying the 8% rate, to avoid penalties.
Q3: Are imports covered by this reduction?
A3: Yes—imports subject to the standard 10% VAT rate now enjoy the 8% rate, barring exceptions.
Conclusion
The VAT rate reduction from 10% to 8% represents a timely “fiscal stimulus” designed to lower costs for businesses and consumers alike. While it entails a measurable impact on state revenues, the government’s accompanying measures aim to preserve budgetary balance and propel the economy toward robust growth. For businesses, the window from now until July 1 is crucial: update your systems, train your teams, and communicate changes clearly to ensure seamless compliance and maximize the benefits of this policy shift.
For tailored advice on how this VAT reduction affects your specific operations, contact the Viettonkin Legal Team today!
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