Vietnam is undergoing significant tax reforms as part of its 2030 tax and fiscal strategy. These reforms are poised to impact various sectors, especially those involved in e-commerce and export activities. This article highlights the key changes in Vietnam VAT (Value Added Tax) [1] and Tax Administration laws [2], to provide affected businesses with crucial insights to navigate the evolving tax landscape in Vietnam. 

Key Impacts for the E-Commerce Industry 

The definition of a ‘VAT taxpayer’ has officially been expanded to include foreign vendors (without a permanent establishment (PE) in Vietnam) that are conducting e-commerce business activities and digital platform-based business in Vietnam.

This expansion empowers tax authorities to collect VAT from foreign vendors providing goods and services via e-commerce or digital platforms. Further guidance on implementation is anticipated in the near future. Businesses conducting cross-border e-commerce activities into Vietnam should be aware of these changes and monitor expected implementation guidelines.

Separately, foreign vendors doing e-commerce business, digital platform-based business and other services in Vietnam are now required to either directly, or authorize another entity to, perform tax registrations, tax filings and payments in Vietnam. Domestic and foreign organizations that manage e-commerce trading platforms, digital platforms having payment functions, and organizations having other digital economic activities (e-platform management entities) must withhold, pay and declare taxes on behalf of business households/individuals who trade on such platforms. 

This provision, taking effective from April 1, 2025, potentially exposes e-commerce platform operators with compliance obligations and liabilities from trading transactions not conducted by the e-commerce platforms themselves, but by third-party vendors. Conforming to the new provisions could be a challenging and high-risk task for operators of e-commerce/digital platforms in Vietnam.

Key Impacts for Exporters of Goods and Services in Vietnam

The new VAT law requires that goods from Vietnam sold to overseas individuals or organizations must be consumed outside of Vietnam. Goods from inland Vietnam sold to organizations located in nontariff zones must be directly used for export production activities.
In addition, the VAT law consequently results in on-the-spot exports no longer being categorized as an ‘other case of exported goods or services.’ This change may implicate overseas principal entities that use local Vietnam manufacturers for export trade.

Services must be provided directly to an organization or individuals abroad and consumed outside Vietnam. Services provided directly to organizations in nontariff zones and consumed in the nontariff zones must be used directly for export production activities to be considered export services.
Furthermore, intermediary processing goods for export is still eligible for zero-rating, but only if the goods are transported out of Vietnam.

How Business Should Prepare

This legislation represents a significant shift in Vietnam’s tax framework, aimed at fostering a more flexible and responsive tax environment. However, businesses in the e-commerce and export industries must prepare in advance for optimal implementation of any change. To prepare, businesses can:

Understand the New Provisions: Familiarize yourself with the key changes in the 2024 VAT Law, which will take effect from July 1, 2025. This includes the changes of VAT rates applicable to various goods and services.

Review Impact on Pricing and Contracts: Assess how the changes will affect your pricing strategies and existing contracts. Ensure that your pricing models reflect the new VAT changes and any sector-specific exemptions.

Train Staff: Conduct training sessions for your finance and accounting teams to ensure they are well-versed in the new VAT regulations and can implement them effectively.

Consult with Tax Advisors: Engage with tax professionals to get tailored advice on how the changes will impact your business operations and to ensure compliance with the new law.

How We Can Help

Our A&M Tax team, based in Vietnam, is here to support you in navigating these evolving tax changes. We can help you understand and adapt to the new regulations, ensuring your business is prepared for the potential impacts of the tax system reform. If you need more information or wish to discuss the implications further, please do not hesitate to contact us.

[1] Nội Dung Văn Bản 'Luật 48/2024/QH15', Law No.: 48/2024/QH15, Value Added Tax, Socialist Republic of Vietnam, November 26, 2024, https://thuvienphapluat.vn/van-ban/Thue-Phi-Le-Phi/Luat-Thue-gia-tri-gia-tang-2024-so-48-2024-QH15-556390.aspx

[2] Nội Dung Văn Bản 'Luật 56/2024/QH15', Law No.: 56/2024/QH15, Socialist Republic of Vietnam, November 29, 2024, https://thuvienphapluat.vn/van-ban/Thue-Phi-Le-Phi/Luat-sua-doi-Luat-Chung-khoan-Ke-toan-Ngan-sach-Nha-nuoc-Thue-thu-nhap-ca-nhan-2024-622318.aspx