Understanding Vietnam’s New Tax and Transfer Pricing Regulations for 2025

In light of the significant challenges businesses in Vietnam face, new regulations are set to roll out beginning in late 2024. These regulations aim to enhance the operating environment for enterprises, particularly focusing on tax and transfer pricing compliance. This article dives into the key developments that stakeholders need to know to navigate these changes effectively.

New Value Added Tax Law

Overview of the VAT Changes

Vietnam’s new Law on Value Added Tax (VAT) is poised to take effect on July 1, 2025. It brings substantial transformations in how VAT operates in the country. Enterprises will need to invest considerable effort to adapt to these changes and maintain compliance.

Changes in Exported Goods and Services

Under Law No. 90/2025/QH15, the classification of exported goods has been updated significantly. Key changes include:

• Direct Exports: Goods sold to overseas entities, consumed outside of Vietnam.
• Non-Tariff Zone Sales: Goods sold for immediate use in export activities.
• Quarantined Areas: Sales to individuals who have completed exit procedures and to duty-free shops.
• On-the-Spot Exports: Goods sold from Vietnam to overseas parties but delivered to a different company in Vietnam.

Exported services are now defined as those provided directly to foreign entities, whether companies or individuals, and consumed outside Vietnam.

VAT for Foreign E-commerce Platforms

Starting July 1, 2025, foreign vendors providing goods and services through e-commerce and digital platforms will be subject to a 10% VAT. Businesses that engage with these platforms must pay close attention to ensure compliance with this new regulation.

VAT Refunds and Compliance Changes

The new VAT Law eliminates the opportunity for VAT refunds in various corporate restructuring scenarios, such as mergers or ownership changes. However, it introduces eligibility for VAT refunds based on unclaimed input VAT exceeding VND 300 million (approx. US$11,900) after 12 months of business operations.

Revised Compliance Thresholds

Changes include the removal of limits on non-cash payments and an increase in the revenue threshold for VAT exemption from VND 100 million to VND 200 million starting January 1, 2026.

On-the-Spot Import and Export Activities

The discussion surrounding on-the-spot import-export operations has evolved. Law 90/2025 clarifies that such transactions can qualify for a 0 percent VAT rate when goods are sold to foreign companies in Vietnam. This amendment simplifies the process significantly for international traders, ensuring that these transactions are officially recognized and incentivized.

Global Minimum Tax

Resolution No. 107/2023/QH15 outlines Vietnam’s plan to implement a Global Minimum Tax (GMT) starting from the 2024 financial year. While the framework for compliance is still under development, businesses should prepare for these changes as they will have profound implications on tax legislation.

Updates on VAT Invoices

Effective June 1, 2025, Decree No. 70/2025/ND-CP will amend various regulations concerning invoices, introducing simplified electronic invoice procedures and better integration with tax authority systems. Staying informed about these changes is essential for businesses managing VAT invoices.

Transfer Pricing Revisions

Decree No. 20/2025/ND-CP, effective March 27, 2025, updates transfer pricing regulations, focusing on compliance and transparency. Key points to note include:

Revised Disclosure Forms

A new disclosure template for related party transactions will be instituted starting in the 2024 financial year.

New Conditions for Related Parties

Under the revised regulations, the determination of related parties must now consider financial borrowing relationships. Updated criteria include maintaining a borrowing balance that is a certain percentage of equity and total liabilities.

Transitional Guidance

For taxpayers previously engaged in related party transactions, transitional guidance outlines how to manage non-deductible expenses in light of new criteria.

Related Party Transactions Definitions

Decree 20 offers comprehensive definitions for related parties, classifying entities based on ownership and managerial control structures, which is crucial for businesses operating within various legal frameworks.

This overview encapsulates critical developments in Vietnam’s tax and transfer pricing regulations that stakeholders should likely monitor as they prepare for upcoming changes. Keeping abreast of these updates will aid in ensuring compliance and fostering smoother business operations in an evolving regulatory landscape.