I. Legal basic

• Decree No. 174/2025/ND-CP
• Resolution No. 204/2025/QH15
• The Law on Value-Added Tax 2024

II. VAT Reduction Policy in 2025

On June 30, 2025, the Government officially issued Decree No. 174/2025/ND-CP, providing guidance on VAT reduction policy. Accordingly, a 2% VAT reduction will continue to be applied to certain groups of goods and services from July 1, 2025, until December 31, 2026.

III. Entities eligible for VAT reduction under Decree No. 174/2025/ND-CP

Pursuant to Article 1 of Decree No. 174/2025/ND-CP, from July 1, 2025, The VAT reduction of 2% (from 10% to 8%) applies only to goods and services currently subject to the 10% VAT rate as specified in Clause 3, Article 9 of the 2024 Law on Value-Added Tax. Specifically, goods and services that are not subject to the 0% or 5% VAT rates will fall under the group eligible for the tax reduction.

1. List of goods and services not eligible for VAT reduction

According to Clause 1, Article 1 of Decree No. 174/2025/ND-CP, three groups of goods and services are excluded from the VAT reduction policy:

• Group 1: Telecommunications; financial, banking, securities, and insurance services; real estate business; metal products; and mineral products (excluding coal)
• Group 2: Goods and services subject to special consumption tax (excluding gasoline)
• Group 3: Information technology services as defined by specialized laws

Goods and services falling under these groups will continue to be subject to the 10% VAT rate as before and are not eligible for the reduced 8% rate.

2. List of goods and services eligible for VAT reduction to 8%

Based on Article 9 of the Law on Value-Added Tax 2024, the scope of goods and services eligible for VAT reduction in 2025 can be determined as follows:

• Not included in the group subject to the 0% tax rate, including: goods and services for export, international transportation, vehicle rental services for use abroad, overseas construction activities, etc.
• Not subject to the 5% VAT rate, including: clean water for daily life, fertilizers, plant protection drugs, machinery and equipment used in agriculture, medical equipment, medicines, books, children’s toys, social housing, etc. 

All other goods and services – that is, those currently subject to the 10% VAT rate – will be reduced to 8% if they are not listed in the exclusion Annexes I, II, and III of Decree No. 174/2025/ND-CP.

IV. How to issue invoices under the new VAT rate

According to Clause 3, Article 1 of Decree No. 174/2025/NĐ-CP, the implementation procedure is prescribed as follows:

– For business establishments that calculate VAT according to the deduction method, the VAT rate of 8% is applied:

• In the VAT rate line, write “8%”
• Clearly state “value-added tax amount” and “total amount payable by the buyer”
• Based on the VAT invoice, the business establishment selling goods or services shall declare output VAT, the business establishment purchasing goods or services shall declare input VAT deduction based on the reduced tax amount stated on the VAT invoice.

– For business establishments (including household businesses and individual businesses) that calculate VAT based on the percentage (%) of revenue:

• In the “Amount” column, record the full price of goods or services before the reduction
• In the line “Total amount of goods and services,” record the amount after applying the 20% reduction to the percentage rate on revenue, and include the following note: “Reduced by… (amount) corresponding to 20% of the percentage rate used to calculate value-added tax according to Resolution No. 204/2025/QH15”.

V. Conclusion

Accordingly, under the 2025 VAT reduction regulations, all goods and services currently subject to the 10% VAT rate will be reduced to 8%, except for those listed in Appendices I, II, and III attached to Decree No. 174/2025/ND-CP. This tax reduction policy not only helps businesses lower their output costs but also significantly impacts the consumer market — both in terms of sentiment and purchasing behavior. Enterprises should proactively review their business portfolios to apply the correct tax rates and avoid errors in invoicing and tax declaration.

VI. About Us, Hankuk Law Firm

■ Hankuk Law Firm – Introduction

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