VAT in Vietnam cut to 8% for July 2025-Dec 2026 period

The National Assembly, Vietnam's legislature, has reduced the VAT rate from 10% to 8% for goods and services from July 1, 2025 to December 31, 2026.

The parliament adopted the resolution on VAT reduction with 452 members present voting in favor, accounting for 94.56% of the total.

Compared to the previous resolutions, the new one expands the coverage of the VAT reduction to some areas including transportation, logistics, and IT products and services.

The goods and services not subject to the tax cut include telecommunications, finance, banking, securities, insurance, real estate, metal products, mineral products (except for coal), and goods and services subject to the special consumption tax (except for gasoline).

Services such as finance, banking, securities, and insurance are not subject to VAT, so there is no need to reduce tax.

Telecommunications and real estate services are industries that have grown in recent times and are also not subject to the tax reduction, according to the resolution.

The Government reported that the VAT reduction may lead to decreases of some VND39.54 trillion ($1.52 billion) in state budget revenue during the second half of 2025, and about VND82.2 trillion ($3.15 billion) in 2026.

However, the move is expected to boost production and business activities, thereby helping to drive revenue sources for the state budget.