Latest Law on Value-Added Tax 2026: Key Highlights FDI Enterprises Need to Understand

Understanding and correctly applying tax regulations is the key to success for FDI enterprises in Vietnam. For the foreign direct investment (FDI) business community, and especially Japanese enterprises—well known for their strict compliance standards and absolute respect for the law—updating the latest Value Added Tax Law is not only an obligation but also a vital factor in protecting profits, avoiding legal risks, and maintaining competitive advantage.

In this article, experts from KMC will analyze the key points that any FDI enterprise must pay attention to when referring to the Value Added Tax Law and applying VAT regulations in their business operations.

Why is the Value Added Tax Law considered the “backbone” of FDI enterprises’ operations?

Value Added Tax (VAT) is an indirect tax imposed on the value added to goods and services arising during the stages from production, circulation, to consumption. For FDI enterprises, this is not only a tax obligation payable to the state budget but also directly affects:

• Cash flow and production costs: The VAT credit and refund mechanism has a significant impact on working capital.
• Product cost and pricing strategy: VAT rates are a component of the selling price.
• Legal documentation and tax inspections: Errors in VAT declaration and invoices are among the leading causes of tax audits, resulting in business disruptions.

Therefore, even a minor change in the latest Value Added Tax Law can create a domino effect, requiring enterprises to immediately adjust from accounting systems to sales and procurement processes.

Latest Value Added Tax Law 2026 – Important Notes for FDI Enterprises

Latest Amendments to the Value Added Tax Law 2024 (No. 48/2024/QH15) currently in force:

Article 7. Taxable Price

1.The taxable price is regulated as follows:

a) For goods and services sold by business establishments, the taxable price is the selling price excluding value added tax; for goods and services subject to special consumption tax, the taxable price is the selling price including special consumption tax but excluding value added tax; for goods subject to environmental protection tax, the taxable price is the selling price including environmental protection tax but excluding value added tax; for goods subject to both special consumption tax and environmental protection tax, the taxable price is the selling price including special consumption tax and environmental protection tax but excluding value added tax;

b) For imported goods, the taxable price is the import taxable value determined in accordance with the law on export and import duties, plus import duty, plus additional import duties (if any) in accordance with the law, plus special consumption tax (if any) and environmental protection tax (if any);

c) For goods and services used for exchange, internal consumption, gifts, donations, or presentations, the taxable price is the value added tax taxable price of goods or services of the same or equivalent type at the time such activities arise. For goods and services used for promotion in accordance with commercial law, the taxable price is determined as zero (0);

d) For leasing activities, the taxable price is the rental amount excluding value added tax;

e) For goods processing activities, the taxable price is the processing fee excluding value added tax;

g) For construction and installation activities, the taxable price is the value of completed works, work items, or delivered work excluding value added tax. In cases where construction or installation does not include materials, machinery, and equipment, the taxable price is the construction or installation value excluding the value of materials, machinery, and equipment;

h) For real estate business activities, the taxable price is the selling price of real estate excluding value added tax minus the land use fee or land rental fee paid to the state budget (deductible land value). The Government shall regulate the determination of deductible land value in accordance with land law;

i) For agency and brokerage activities in buying and selling goods and services, the taxable price is the commission received from such activities excluding value added tax;

k) For goods and services where the payment invoice shows a price inclusive of value added tax, the taxable price shall be determined according to the following formula:

l) For casino business, electronic gaming with prizes, and betting services, the taxable price is the revenue from such activities minus unused exchanged amounts returned to customers and prize payments (if any), including special consumption tax but excluding value added tax;

m) For production and business activities including: electricity generation by Vietnam Electricity Group; transportation and loading/unloading services; tourism services in the form of travel packages; pawn services; books subject to VAT sold at their published price (cover price); printing services; agency services for assessment, compensation appraisal, third-party recovery, and 100% compensation handling agencies earning service fees or commissions, the taxable price is the selling price excluding value added tax. The Government shall provide detailed regulations on taxable price for these activities.

2.The taxable price for goods and services specified in Clause 1 of this Article includes additional charges and surcharges that the business establishment is entitled to receive.

Article 9. Tax Rates

1. The 0% tax rate applies to the following goods and services:

a) Exported goods, including: goods sold from Vietnam to organizations or individuals abroad and consumed outside Vietnam; goods sold from the domestic market to organizations within non-tariff zones and consumed within such zones for direct export production activities; goods sold in quarantine areas to individuals (foreigners or Vietnamese citizens) who have completed exit procedures; goods sold at duty-free shops;

b) Exported services, including: services directly provided to organizations or individuals abroad and consumed outside Vietnam; services directly provided to organizations within non-tariff zones and consumed within such zones for direct export production activities;

c) Other exported goods and services, including: international transportation; leasing of transport vehicles used outside the territory of Vietnam; aviation and maritime services provided directly or through agents for international transport; construction and installation activities performed overseas or within non-tariff zones; digital information content products supplied to foreign parties with documentation proving consumption outside Vietnam in accordance with Government regulations; spare parts and materials for repair and maintenance of vehicles, machinery, and equipment for foreign parties and consumed outside Vietnam; transit processing goods for export in accordance with law; goods and services not subject to VAT when exported, except cases where the 0% tax rate does not apply under point d of this clause;

d) Cases not eligible for the 0% tax rate include: technology transfer, transfer of intellectual property rights abroad; reinsurance services abroad; credit services; capital transfer; derivative products; postal and telecommunications services; exported products specified in Clause 23 Article 5 of this Law; tobacco, alcohol, and beer imported and then re-exported; gasoline and oil purchased domestically and sold to enterprises within non-tariff zones; automobiles sold to organizations and individuals within non-tariff zones.

2. The 5% tax rate applies to the following goods and services:

b) Fertilizers, ores used for fertilizer production, plant protection products, and growth stimulants for livestock in accordance with law;

c) Excavation, dredging services for canals, ditches, ponds, and lakes serving agricultural production; cultivation, care, pest prevention for crops; preliminary processing and preservation of agricultural products;

d) Products of cultivated plants, planted forests (excluding timber and bamboo shoots), livestock, aquaculture, and capture fisheries that are unprocessed or only undergo preliminary processing, except products specified in Clause 1 Article 5 of this Law;

đ) Rubber latex in forms such as crepe rubber, sheet rubber, block rubber, and crumb rubber; nets, ropes, and yarn used for fishing nets;

e) Products made from jute, sedge, bamboo, rattan, leaves, straw, coconut husk, coconut shell, water hyacinth, and other handicraft products made from agricultural by-products; combed or carded cotton fiber; newsprint paper;

g) Fishing vessels operating in marine exploitation; machinery and equipment specialized for agricultural production in accordance with Government regulations;

h) Medical equipment in accordance with laws on medical device management; preventive and curative medicines; pharmaceutical substances and medicinal materials used as inputs for medicine production;

k) Traditional and folk performing arts activities;

l) Toys for children; books of all kinds, except those specified in Clause 15 Article 5 of this Law.

3. The 10% tax rate applies to goods and services not specified in Clauses 1 and 2 of this Article, including services provided by foreign suppliers without a permanent establishment in Vietnam to organizations and individuals in Vietnam via e-commerce channels and digital platforms.

Abolition of Certain Related Provisions

On December 11, 2025, the National Assembly officially passed the Law amending and supplementing a number of provisions of the Value Added Tax Law (Law No. 149/2025/QH15), effective from January 1, 2026, introducing several reforms, including the following key amendments:

– Abolition of Clause 3, Article 12 of the 2024 Value Added Tax Law:

Households and individuals engaged in production and business activities that do not implement or fully comply with accounting, invoice, and document regimes as prescribed by law shall pay value added tax under the lump-sum tax method stipulated in the Law on Tax Administration.

This provision is consistent with the State’s policy of abolishing the lump-sum tax regime, contributing to ensuring fairness and transparency in tax administration activities.

– Abolition of Point c, Clause 9, Article 15 of the 2024 VAT Law:

Specifically, the requirement that the seller must declare and pay VAT in accordance with regulations for output invoices issued to enterprises requesting tax refunds is abolished.

This was previously one of the conditions that enterprises had to meet when applying for tax refunds. Accordingly, under the new regulations, the tax refund procedure is simplified, reducing conditions related to the seller’s output tax obligations.

Forecast of Emerging Trends Related to Value Added Tax (VAT)

As of 2026, the legal framework for Value Added Tax (VAT) in Vietnam is still based on the Value Added Tax Law No. 13/2008/QH12, together with its amended and supplemented laws and guiding subordinate regulations. However, tax reform trends and draft amendments are continuously placed on the legislative agenda. FDI enterprises, given their large scale and high transaction frequency, need to pay special attention to the following key areas:

VAT Rates and Taxable Subjects

Enterprises should proactively understand and properly determine the applicable VAT rates for their business activities.

The future Value Added Tax Law may adjust the classification of goods and services under the basic VAT rate categories of 0%, 5%, and 10%. For example, priority sectors (such as high technology and clean energy) may be proposed for more preferential tax treatment. Conversely, certain goods and services with social impact may be subject to increased tax rates. FDI enterprises should be prepared for these scenarios in order to develop appropriate long-term business plans.

Input VAT Deduction and VAT Refund Mechanism

Regulations on input VAT deduction conditions (valid and lawful invoices, and goods and services used for VAT-liable production and business activities) are being increasingly tightened. One important insight that is often overlooked by many enterprises is the risk arising from transactions with non-compliant partners. If a supplier has tax compliance issues, your input invoices may be disallowed, resulting in significant financial losses.

In addition, VAT refund procedures for investment projects and export-oriented enterprises remain complex. Although policies have been improved, preparing VAT refund dossiers in accordance with the latest Value Added Tax Law and its guiding regulations still requires careful attention and detailed understanding.

Digital Transformation in Tax Administration: E-Invoicing and Tax Filing

A key trend in the modern business environment is the full adoption of electronic invoices. Under current regulations, most enterprises—especially foreign-invested enterprises—are required to use e-invoices. The future Value Added Tax Law will continue to strengthen and expand this requirement, while integrating more closely with the electronic tax filing system.

FDI enterprises, particularly Japanese-invested enterprises known for high technological standards, must ensure that their internal systems are fully compatible with the national tax portal to avoid disruptions in business transactions.

Official information on e-invoicing is continuously updated on the portal of the General Department of Taxation of Vietnam.

Special recommendations for Japanese companies in Vietnam

Japanese business culture places compliance and stability as top priorities. To effectively manage VAT risks, enterprises should:

• Establish a specialized internal tax management/reporting function:

Beyond accounting, dedicated personnel should closely monitor new legal documents and analyze their specific impacts on each business segment.

• Conduct periodic training for accounting and procurement staff:

Ensure that all personnel involved in invoices and contracts fully understand the regulations on input VAT deduction conditions.

• Select reputable tax advisory partners with expertise in both Vietnamese law and Japanese corporate culture:

A reliable local partner serves as an invaluable bridge, helping enterprises quickly resolve issues arising with tax authorities while also advising on legally optimized tax cost solutions.

•  Proactively prepare annual tax planning:

Forecast VAT payable, deductible VAT, and VAT refunds to balance cash flow and avoid a passive financial position.

Professional Tax and Accounting Legal Advisory Services for FDI Enterprises

The essence of the latest Value Added Tax Law or any tax law is to enhance transparency, improve the efficiency of tax administration, and align with international practices.

However, amendments and revisions to the VAT Law, as well as related tax policies and administrative procedures, can often place a significant burden on enterprises, especially FDI companies. Therefore, instead of independently managing tax compliance and continuously updating the latest regulatory changes, most FDI enterprises choose to engage professional service providers to handle tax advisory and accounting functions.

With a team of lawyers and experts possessing in-depth knowledge of accounting, auditing regulations, and continuously staying up to date with the latest legal developments, KMC fully understands and accurately applies tax regulations to help FDI enterprises avoid unnecessary penalties while also creating opportunities for legitimate tax cost optimization through refund mechanisms and tax incentives.

For comprehensive tax and accounting advisory and solutions for your business, please contact KMC. We provide optimal support for FDI enterprises, ensuring all operations run smoothly in full compliance with the latest Value Added Tax Law. This allows you not only to focus on your core business with peace of mind, but also to build a professional and sustainable FDI enterprise image in Vietnam’s dynamic market.

For quick consultation from KMC experts, please call hotline: 081 489 4789.