Vietnam VAT System Explained – Guide for Businesses

VAT in Vietnam

In Vietnam, the Value Added Tax (VAT) is a consumption tax imposed on the supply of goods and services, as well as on imports. It is a major source of government revenue and is governed by the Law on Value-Added Tax, under the supervision of the General Department of Taxation (GDT).

VAT is applicable at each stage of the supply chain, but the burden is borne by the final consumer. Businesses are responsible for collecting VAT from customers and remitting it to the tax authority.

📊 VAT Rates in Vietnam

Vietnam applies three VAT rates depending on the nature of goods and services:

🔹 Standard Rate: 10%

This rate is applied to most goods and services, such as electronics, apparel, consulting, transportation, and real estate.

🟡 Reduced Rate: 5%

Applied to essential goods and services including clean water, agricultural tools, fertilizers, education, medical equipment, and public transportation.

🟢 Zero Rate: 0%

Applied to exported goods and services, international transportation, and supply to export processing zones.

🚫 VAT Exempt Items:

Include financial services, life insurance, residential housing, and public postal services.

🏢 Who Must Register for VAT in Vietnam?

📍 Domestic Businesses:

Businesses must register for VAT if they are engaged in manufacturing, trading, or providing taxable goods or services, regardless of turnover.

🌍 Foreign Businesses:

Foreign companies providing services or selling goods into Vietnam (especially digital services) must also register through a tax agent or representative unless they operate through a permanent establishment.

🔢 Vietnam VAT Number Format

Upon registration, businesses receive a 10-digit or 13-digit tax code, which also serves as their VAT number.

Example: 0312345678 or 0312345678-001

This number must appear on all VAT invoices, tax returns, and official correspondence.

🧾 VAT Invoicing Requirements

Businesses must issue VAT invoices for every taxable sale. Invoices can be paper-based or electronic (e-invoices are becoming mandatory nationwide).

A valid invoice must include:

• Invoice number and issuance date
• Seller and buyer details (name, address, tax ID)
• Description of goods/services
• Quantity and unit price
• VAT rate and VAT amount
• Total amount (with and without VAT)

Since 2022, most businesses are required to use electronic invoices under Decree No. 123/2020/ND-CP.

🧮 VAT Calculation Example

Scenario: You sell a product for VND 50,000,000 with 10% VAT.

• VAT = 50,000,000 × 10% = VND 5,000,000
• Total = VND 55,000,000

You collect this amount from the customer and remit the VAT to the GDT.

📅 VAT Filing and Payment in Vietnam

Filing Frequency:

• 📆 Monthly: For businesses with annual revenue over VND 50 billion
• 📆 Quarterly: For businesses under the threshold

Deadlines:

• VAT returns must be filed by the 20th of the following month (monthly) or 30th of the month following the quarter (quarterly).
• VAT payments must be made within the same deadline.

Filing Method:

Returns must be filed online using the Vietnam General Department of Taxation’s eTax portal.

🌍 VAT on Imports and Exports

📥 Imports:

All imported goods are subject to VAT at the point of entry. The rate depends on the product category.

📤 Exports:

Exports are zero-rated (0%), allowing exporters to reclaim input VAT. Exporters must retain proper customs and shipping documents to support the claim.

💻 VAT on Cross-Border Digital Services

Foreign businesses providing digital goods or services to Vietnamese consumers must:

• Register through a tax representative in Vietnam
• File quarterly VAT returns
• Pay 10% VAT on services such as streaming, software, e-commerce, and online advertising

🚫 VAT-Exempt Goods and Services

Some items and services are exempt from VAT, including:

• Credit and financial services
• Life insurance
• Public postal and telecommunications services
• Transfer of land use rights
• Certain medical and educational services

Note: Businesses that only provide exempt services cannot claim input VAT credits.

✅ VAT Compliance Checklist

• ✔️ Register for VAT if providing taxable goods or services
• ✔️ Use the correct VAT rate on every transaction
• ✔️ Issue e-invoices for all sales
• ✔️ File monthly or quarterly returns on time
• ✔️ Maintain complete transaction records for 10 years
• ✔️ Claim input VAT correctly and keep supporting documentation
• ✔️ For exports, ensure all zero-rated transactions are backed by customs proof

Vietnam's VAT system is a vital component of doing business in the country, with growing emphasis on digitalization and enforcement. Businesses both domestic and foreign must remain compliant by registering properly, issuing correct invoices, and filing timely returns.

👉 Try our Vietnam VAT Calculator 🇻🇳 at GSTCal.org for real-time VAT computations tailored to Vietnam’s tax rates and rules!