DECREE 181: PROVISIONS ON VALUE ADDED TAX - SOME IMPORTANT CHANGES TO NOTE

On July 1, 2025, the Government issued Decree No. 181/2025/ND-CP detailing the implementation of certain provisions of the Law on Value-Added Tax (VAT) dated November 26, 2024.

In addition to the key updates already provided under the VAT Law (which we analyzed in a previous bulletin), notable provisions of Decree 181 include:

1. VAT taxable price for goods and services used for exchange, internal consumption, gifts, donations, and promotions

Goods and services used for exchange, internal consumption, gifts, donations, or promotional purposes must be subject to VAT as if they were sold, based on the market price of similar or equivalent goods/services at the time of the transaction, except in the following cases, which are not subject to VAT:

• Goods and services used for continued production or business activities;

• Goods and services provided by a business establishment for internal production/business operations;

• ·Assets transferred among business units.

2. VAT taxable price for promotional goods and services

The VAT taxable price of zero (0) applies when:

• The goods or services are determined to be legitimate promotional items;

• The promotional program is registered and notified in accordance with regulations.

If the promotion does not comply with commercial laws, VAT must still be declared and paid as if the goods/services were sold normally.

Forms of promotion with a VAT taxable price of zero or not included in the selling price:

• Samples of goods or services provided free of charge for trial purposes: taxable price is zero.

• Free promotional gifts of goods/services: taxable price is zero.

• Sales bundled with vouchers for goods or services: the value of the voucher is excluded from the taxable price (if issued together and no extra charge is collected).

• Sales with prize entry forms or lucky draw prizes: no VAT is applied to the prize portion if the terms and prize value are announced and legal requirements are met.

• Sales of goods/services bundled with promotional gifts: if the gift is clearly defined as a legitimate promotional item, VAT is not applied to the gift value.

3. Export services subject to 0% VAT include the following notable cases

• Services directly provided to overseas organizations or individuals and consumed outside of Vietnam. For individuals, this means they must be physically outside Vietnam during the service provision.

• Services provided to entities in non-tariff zones and consumed within such zones, specifically for export manufacturing activities, including:

  • Services directly provided to entities in non-tariff zones for export production;

  • Transport and logistics services provided to export processing enterprises (e.g., container handling at ports, factories, warehouses; loading/unloading at factories, ports, airports; and related costs such as documentation fees, delivery electricity charges, seal fees, handling fees, packing fees).

Note: Entities in non-tariff zones must be registered businesses.

• Digital content products supplied to overseas clients, which may include text, data, images, and audio in digital format transmitted over a network, as defined by laws on information technology.

Businesses must retain documents proving consumption outside of Vietnam, such as:

• Information about the foreign buyer’s residence status (e.g., billing address, shipping address, registered office, home address, or other information declared by the buyer);

• Access information of the foreign buyer (e.g., SIM card country code, IP address, landline location, or similar technical details).

4. Agricultural, forestry, livestock, and aquatic products

Crops, planted forests (excluding timber and bamboo), livestock, aquaculture, and seafood caught or farmed without further processing or only minimally processed are subject to 5% VAT at the commercial sales stage.

5. Deductibility of input VAT

• Input VAT incurred in a month or quarter shall be declared and deducted when determining the payable VAT for that same month or quarter, regardless of whether the goods/services have been used or are still in stock. Unused deductible VAT may be carried forward to subsequent periods.

• If the business detects errors or omissions in input VAT declaration/deduction, adjustments must be made before the tax authority announces a tax audit or inspection decision:

  • If the error increases VAT payable or reduces VAT refundable, the taxpayer must file a supplementary declaration in the period where the error occurred, pay the additional VAT and return any refunded VAT, and pay late payment interest (if applicable).

  • If the error reduces VAT payable or only affects the carry-forward deductible VAT, the taxpayer may declare adjustments in the period where the error is discovered.

• Input VAT on goods (purchased or self-manufactured) used for gifting, giving, promotion, or advertising is deductible.

• For non-deductible input VAT, the business may account for it:

  • As a deductible expense when calculating corporate income tax, or

  • As part of the original cost of fixed assets, in accordance with corporate income tax regulations—except for purchases of goods/services worth ≥ VND 5 million per transaction without non-cash payment evidence.

6. Non-cash payment documents

• Businesses must retain non-cash payment documents for any purchase of goods or services (including imports) valued at VND 5 million or more, inclusive of VAT.

• A non-cash payment document refers to evidence of non-cash payment as defined under Decree No. 52/2024/ND-CP dated May 15, 2024, on non-cash payments, excluding cases where the buyer deposits cash into the seller’s bank account.

• In the case of offset payment methods, such as:

  • Offsetting the value of purchased goods/services with sales revenue or with borrowed/lent goods—if this method is clearly defined in the contract—there must be a reconciliation statement confirmed by both parties regarding the offset.

  • Offsetting via a third party must be supported by a tripartite reconciliation document to serve as the basis for VAT deduction.

• In the case of debt offsetting involving borrowed/lent funds, if the payment method is stipulated in the contract, there must be:

  • A loan/borrowing contract in writing, signed beforehand, and

  • A fund transfer document proving the transfer of money from the lender’s account to the borrower’s account (this includes offsetting purchase value with financial support or advanced payments made on behalf of the buyer).

• For one-time purchases or imports under VND 5 million, or in cases where goods are imported as gifts, samples, or donations from foreign organizations/individuals, non-cash payment documents are not required.

• For purchases made by employees authorized by the business to make non-cash payments (according to internal financial/internal regulations), and where the business later reimburses the employee via non-cash payment, input VAT remains deductible.

7. Conditions for input VAT deduction for goods exported via foreign e-commerce platforms

To deduct and refund input VAT on goods exported through overseas e-commerce platforms, businesses must prepare a complete set of export documents, including:

• A contract with the foreign e-commerce platform;

• A sales invoice in accordance with Vietnamese laws;

• Non-cash payment evidence;

• A customs declaration with export confirmation by customs authorities;

• Proof of delivery to the foreign buyer (e.g., bill of lading, transport documents, warehouse receipt, delivery tracking, etc.).

Note:

• Businesses must sign a contract with the e-commerce platform operator to sell on the platform. Order transactions must comply with regulations on e-commerce and electronic transactions.

• If the business authorizes the platform to collect payments from foreign buyers, this authorization must be clearly stated in the contract with the platform.

8. VAT refund for investment projects

Businesses applying the credit method of VAT payment, with new or expanded investment projects (including phased or multi-component projects) currently in the investment stage, and with input VAT not yet refunded, may:

• Offset the input VAT against VAT payable from current production or business activities (if any);

• If the remaining uncredited VAT is VND 300 million or more, the business is eligible for a refund;

• If the project or phase/component has completed but refund procedures are not yet filed, the business must submit the refund dossier within 1 year from the date revenue is generated from that project or component.

Note: Revenue used to determine the time of VAT refund does not include trial operation revenue, financial activities, or liquidation of materials/assets.

For investment projects that began before July 1, 2025 and are still under construction after the effective date of the Decree, the VAT refund policy under Decree 181 remains applicable.

9. VAT refund for goods/services subject to 5% VAT

• A business that only produces goods or provides services subject to 5% VAT, and after 12 consecutive months or 4 consecutive quarters, the uncredited input VAT reaches VND 300 million or more, is eligible for a VAT refund.

• For businesses involved in multiple VAT rates (not only 5%), they must:

  • Separate the input VAT for activities subject to 5% VAT;

  • For shared input VAT, if it cannot be separated, allocate it using the revenue ratio:

Refundable VAT = Total shared input VAT x (Revenue from 5% VAT activities / Total taxable revenue during the refund period right)

• The refund period is calculated from the period where uncredited VAT arises continuously until the period when the refund is requested.

• After offsetting against VAT payable (if any), any remaining amount of VND 300 million or more qualifies for refund.

Note: This regulation applies to input VAT incurred after the effective date of Decree 181/2025/ND-CP.

The Ministry of Finance will provide detailed guidelines on how to determine refundable input VAT in these cases.

Please contact W&A for tailored advice regarding Decree 181 regulations.

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