I. Legal basis

• Value-Added Tax Law 2024;
• Amended Value-Added Tax Law 2025;
• Decree No. 359/2025/ND-CP

II. Some new provisions of the amended Value-Added Tax Law 2025, effective from 1 January 2026

1. Addition of entities not required to declare and pay VAT but entitled to input VAT deduction

Pursuant to Point (a), Clause 1, Article 1 of the Amended Value-Added Tax Law 2025, which amends and supplements Clause 1, Article 5 of the Value-Added Tax Law 2024, a category of entities not required to declare, calculate, or pay value-added tax but still entitled, in certain cases, to input VAT deduction has been added, specifically as follows:

“Enterprises, cooperatives, and cooperative unions that purchase products of cultivated crops, plantation forests, livestock, aquaculture, or captured fisheries which have not been processed into other products or have only undergone ordinary preliminary processing, and sell such products to other enterprises, cooperatives, or cooperative unions, shall not be required to declare, calculate, or pay value-added tax, but shall be entitled to deduct input value-added tax.”

2. Increase of the revenue threshold for VAT liability of household businesses and individual business operators to VND 500 million per year

Point (b), Clause 1, Article 1 of the Amended Value-Added Tax Law 2025 amends and supplements Clause 25, Article 5 of the Value-Added Tax Law 2024 as follows:

“25. Goods and services supplied by household businesses and individual business operators with annual revenue of VND 500 million or less; assets sold by organizations and individuals not engaged in business and not subject to value-added tax; national reserve goods sold by national reserve authorities; and charges and fees collected in accordance with the law on charges and fees.”

Accordingly, the Amended Value-Added Tax Law 2025 has increased the VAT-exempt revenue threshold applicable to goods and services of household businesses and individual business operators from VND 200 million per year to VND 500 million per year.

3. Abolition of the presumptive tax regime for household businesses and individual business operators

Pursuant to Clause 3, Article 1 of the Amended Value-Added Tax Law 2025, the provision in Clause 3, Article 12 of the Value-Added Tax Law 2024 is repealed:

“Household businesses and individual business operators that fail to implement, or fail to fully implement, the accounting, invoicing, and documentary regimes as prescribed by law shall pay value-added tax under the presumptive tax method as provided in the Law on Tax Administration.”

This repeal is consistent with the State’s policy of abolishing the presumptive tax regime, thereby contributing to greater fairness and transparency in tax administration.

4. Abolition of one condition for VAT refund

Clause 3, Article 1 of the Amended Value-Added Tax Law 2025 repeals Point (c), Clause 9, Article 15 of the Value-Added Tax Law 2024—one of the conditions for VAT refund—which provided that:

“The seller must have declared and paid value-added tax in accordance with the law in respect of the invoice issued to the business establishment applying for a tax refund.”

After the amendment, the conditions for VAT refund are reduced to only two criteria as prescribed in Clause 9, Article 15 of the Value-Added Tax Law 2024, as follows:

9. Business establishments falling within the cases eligible for tax refund as provided in this Article must satisfy the following conditions:
10. a) Business establishments eligible for tax refund under Clauses 1, 2, 3, and 4 of this Article must apply the credit (deduction) method for value-added tax, prepare and maintain accounting books and accounting documents in accordance with the law on accounting, and have a bank account opened under the tax identification number of the business establishment;
11. b) They must satisfy the requirements for input VAT deduction as prescribed in Clause 2, Article 14 and must not fall within the cases specified in Clause 3, Article 14 of this Law.

5. Regulations on the VAT rates applicable to scrap, by-products, and waste recovered in the course of production

The current regulation under Clause 5, Article 9 of the Value-Added Tax Law 2024 provides as follows:

Products of cultivated crops, plantation forests, livestock, aquaculture, and captured fisheries that have not been processed into other products or have only undergone ordinary preliminary processing and are used as animal feed or medicinal materials shall be subject to the value-added tax rate applicable to products of cultivated crops, plantation forests, livestock, and fisheries.

Scrap, by-products, and waste recovered for recycling or reuse, when sold, shall be subject to the VAT rate applicable to the specific scrap, by-product, or waste item sold.

The new provision as amended by Clause 2, Article 1 of the Amended Value-Added Tax Law 2025 provides as follows:

Scrap, by-products, and waste recovered in the course of production shall be subject to the VAT rate applicable to such scrap, by-products, or waste.

Compared with the previous regulation, the new provision no longer prescribes a VAT rate for unprocessed agricultural products, as this category has been brought within the scope of VAT-exempt goods.

At the same time, the VAT rate applicable to scrap, by-products, and waste recovered in the course of production continues to be determined based on the specific scrap, by-product, or waste concerned.

III. Conclusion

The Amended Value-Added Tax Law 2025, effective from 1 January 2026, represents a significant adjustment in indirect tax policy in a direction more closely aligned with practical tax administration, production and business activities, and the State’s policy of reforming tax administrative procedures. The newly amended and supplemented provisions focus on expanding the categories of entities not required to declare and pay tax but still entitled to input tax deduction; raising the VAT-exempt revenue threshold for household businesses and individual business operators; abolishing the presumptive tax method; simplifying the conditions for tax refunds; and clarifying the application of VAT rates to scrap, by-products, and waste generated in the course of production.

These changes not only help ensure fairness and transparency in tax administration, but also create more favorable conditions for taxpayers, particularly household businesses, individual business operators, and enterprises operating in the agricultural and manufacturing sectors. At the same time, the streamlining of refund conditions and the harmonization of the determination of tax rates contribute to reducing implementation difficulties and enhancing the effectiveness of state management of value-added tax.

In the context of the imminent application of the new regulations, taxpayers should proactively review their production and business activities, declaration methods, and tax compliance practices in order to ensure full compliance with the law, mitigate legal risks, and promptly take advantage of the new supportive and incentive-based policies introduced under the Amended Value-Added Tax Law 2025.

IV. About Us, Hankuk Law Firm

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