Vietnam’s Tax and Transfer Pricing Compliance: Key Updates in 2025

In response to the significant challenges that businesses in Vietnam currently face, a series of new regulations has been introduced, beginning in late 2024, designed to enhance the operating environment for enterprises. This article outlines the key developments that stakeholders should be aware of in order to navigate Vietnam’s tax and transfer pricing compliance effectively.

New Value Added Tax Law

Vietnam’s new Law on Value Added Tax (VAT), set to take effect on July 1, 2025, introduces significant changes to the country’s VAT regime.

Changes in exported goods and services entitled to 0 percent VAT

The new VAT Law clearly defines exported goods and services, distinguishing them from the existing VAT regulations as follows: 

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• Exported goods are those sold from Vietnam to overseas entities and utilized outside the country, or goods from inland Vietnam sold to companies in non-tariff zones for direct use in export production activities.
• Exported services encompass those provided directly to individuals and companies abroad, consumed outside Vietnam, or services delivered straight to companies in non-tariff zones, serving export production efforts.

Also read: Vietnam’s 2024 VAT Law and Extension of 2% VAT Reduction till June ’25

Foreign companies engaged in e-commerce and digital services

According to the new VAT Law, goods and services supplied by foreign vendors on e-commerce and digital platforms will incur a 10 percent VAT starting July 1, 2025. Businesses must pay closer attention to this change to ensure compliance with the new regulations.

VAT Refund

The new VAT Law eliminates VAT refunds for changes in ownership, enterprise type, merger, consolidation, separation, or de-merger, retaining only cases related to dissolution. Additionally, it introduces new instances in which businesses that exclusively produce goods and offer services subject to a 5-percent VAT rate may be eligible for a VAT refund if the amount of unclaimed input VAT reaches VND 300 million (approximately US$11,900) or more after 12 consecutive months or four consecutive quarters, as well as for refunds pertaining to business expansion investments.

For more information regarding the new VAT Law, please read: Vietnam’s New VAT Law: Key Compliance Guidance

Adjusted thresholds for the VAT compliance regime

Vietnam’s updated VAT Law has removed the limit on non-cash payments. Detailing the regulations for implementing aspects of this new VAT Law specifies that businesses are required to have non-cash payment receipts for goods and services (including imported goods) priced at VND 5 million or above, inclusive of VAT. Thus, transactions exceeding VND 5 million (approximately US$192) must be completed via bank transfers, unless the government grants an exception.

Furthermore, the updated Law will increase the annual revenue threshold for business individuals and households exempt from VAT from VND 100 million (US$3,900) to VND 200 million (US$7,900). This measure will take effect on 1 January 2026.

On-spot import and export activities in Vietnam

Over the past two years, on-spot import-export activities in Vietnam have been the subject of ongoing discussion and remain unresolved as of today.

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The draft of the new customs regulations indicates that Vietnamese authorities plan to abolish the on-spot import-export scheme. This specifically applies when a Vietnamese seller supplies products to another local company at the behest of a foreign buyer with a commercial presence in Vietnam, as other countries do not utilize this model.

Based on our observations, this proposed change could have a significant impact on businesses that rely on this mechanism. Therefore, companies are advised to carefully assess their circumstances and develop strategic plans to adapt their future operations in Vietnam accordingly.

Although the Vietnamese authorities have not yet reached a final conclusion, in an Official Letter No. 1872/BTC-TCT dated 17 February 2025 of the Ministry of Finance addressed to the People’s Committee of Dong Nai Province, confirmed that in cases where Vietnamese companies sell goods to foreign companies with a presence in Vietnam, and the goods are delivered to a bonded warehouse, such transactions do not qualify as exports and are therefore not eligible for the 0 percent VAT rate.

For more details, please read: Vietnam’s Import-Export Regime: Managing Customs and Tax Benefits

Global Minimum Tax

On 29 November 2023, Vietnam’s Ministry of Finance issued Resolution No. 107/2023/QH15 (“Resolution 107”), which provides initial information on the Global Minimum Tax (GMT) in Vietnam. According to this Resolution, the GMT regulation will apply in Vietnam starting from the 2024 financial year. However, as of today, the decree that will provide more specific guidance on how to comply with the GMT is still in draft form.

Currently, the finalization of the decree has not yet been decided, particularly since Vietnam’s tax system has just undergone significant internal restructuring beginning in March 2025. Following this restructuring, the number of tax offices across the country has been dramatically reduced due to mergers and staff layoffs.

For more information regarding GMT in Vietnam, please read:

• Global Minimum Tax (GMT) in Vietnam – Vietnam Guide | Doing Business in Vietnam
• How Vietnam Will Implement the Global Minimum Tax: Draft Decree
• Vietnam Introduces Tax Department under Decision 381

VAT invoice

Effective from 1 June 2025, Decree No. 70/2025/ND-CP (“Decree 70”) will amend and supplement a broad range of provisions under the current invoice regulation – Decree 123/2020/ND-CP (“Decree 123”), focusing on enhancing compliance, simplifying e-invoice issuance procedures, and improving integration with the tax authority’s systems.

For more information, please read: Invoice Compliance in Vietnam: Key Changes under Decree 70

Transfer pricing updates

On 10 February 2025, the Vietnamese government issued Decree No. 20/2025/ND-CP (“Decree 20”), which amends certain articles of Decree 132/2020/ND-CP (“Decree 132”). The decree, effective as of 27 March 2025, aims to provide a more transparent framework for tax compliance related to transfer pricing issues. The decree will take effect from the financial year 2024 onwards.

Update TP declaration form

Decree 20 presents a revised version of Appendix I – Disclosure of Related Parties and Related Party Transactions, which updates the related party relationships. This revised template will take effect starting in the 2024 financial year, superseding the current one specified in Decree 132.

Amendments of related parties through financial borrowings

Decree 20 amends the conditions for determining an entity as a related party based on financial borrowings, which state that the outstanding balance of covered borrowings must be:

• At least 25 percent of the borrower’s equity; and
• At least 50 percent of the total outstanding balance of medium and long-term liabilities.

Transitional guidance related to interest deductibility cap

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If, during the tax years 2020, 2021, 2022, and 2023, taxpayers only participated in related party borrowing transactions with financial institutions under Decree 132 and become disqualified as related parties from 2024 due to the criteria outlined in Decree 20, they can distribute non-deductible expenses evenly over the remaining years. Specifically, non-deductible interest expenses up to the end of 2020 may be allocated equally to 2024 and 2025 for the purpose of deduction.

Supplements for related party cases

Decree 20 modifies descriptions for certain related parties as follows:

• Branches considered related parties: A branch is deemed a related party if it satisfies the following conditions:
  • Being an independent branch;
  • Paying corporate income tax (CIT); and
  • Being subject to the actual management, control, and decision-making concerning another enterprise’s production and other business activities.
• Credit institutions with subsidiaries/controlling companies/affiliates: Credit institutions with subsidiaries, controlling companies, or affiliates are regarded as related parties if they fulfill the requirements set forth in the Law on Credit Institutions and any amendments, supplements, or changes, if applicable.

For more information, please read: Related Party Transactions in Vietnam: Key Provisions Under Decree 20

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