On 31 December 2025, the Government promulgated Decree No. 359/2025/NĐ-CP, amending and supplementing Decree No. 181/2025/NĐ-CP, which provides guidance on the Law on Value Added Tax 2024

by KMC Consulting Company Limited

Below is a summary of four (04) key new provisions introduced by Decree No. 359/2025/NĐ-CP amending and supplementing Decree No. 181/2025/NĐ-CP, with respect to the implementation of the Law on Value Added Tax (VAT):

1. New regulations on VAT non-taxable objects

Enterprises, cooperatives, and cooperative unions that purchase products of crops, planted 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 or pay VAT, but shall be entitled to deduct input VAT.

Specifically:

  • Enterprises, cooperatives, and cooperative unions applying the credit method for VAT calculation, when selling products of crops, planted forests, livestock, aquaculture, or captured fisheries that are unprocessed or only preliminarily processed to other enterprises, cooperatives, or cooperative unions at the commercial trading stage, shall not be required to declare or pay VAT.
  • In cases where enterprises, cooperatives, or cooperative unions applying the credit method sell such products to households, individuals engaged in production or business, or other organizations and individuals, VAT shall be charged at the tax rate of 5%, in accordance with Clause 3, Article 19 of Decree No. 181/2025/NĐ-CP.
  • Households, individuals engaged in production or business, enterprises, cooperatives, cooperative unions, and other economic organizations applying the direct method for VAT calculation, when selling such products at the commercial trading stage, shall calculate VAT payable based on revenue at a rate of 1% of turnover.

2. Abolition of the condition that the seller must have declared and paid VAT in order for the buyer to be eligible for VAT refund

Clause 3, Article 37 of Decree No. 181/2025/NĐ-CP previously stipulated conditions for VAT refunds as follows:

The condition that the seller must have declared and paid VAT in accordance with regulations for invoices issued to the VAT refund-claiming business entity was determined based on the following criteria:

  • At the time the business entity submitted the VAT refund application dossier, the seller must have submitted the VAT return in accordance with regulations and must have no outstanding VAT liabilities corresponding to the tax period falling within the refund period.
  • The tax authority, at the time of receipt of the VAT refund application, would determine whether the seller had declared and paid VAT in accordance with regulations based on the automated information technology system.
  • Where it was determined that the seller had not fully submitted VAT returns for the corresponding tax period (including cases where the deadline for submission had not yet fallen), or still had outstanding VAT liabilities, the business entity would not be entitled to a VAT refund for invoices corresponding to such tax periods.

Decree No. 359/2025/NĐ-CP has abolished the above-mentioned VAT refund condition in its entirety.

3. Abolition of the effective time for applying the VAT refund condition

Clause 3, Article 39 of Decree No. 181/2025/NĐ-CP previously provided transitional provisions as follows:

“Transitional provisions

…

  1. The provisions in Clause 3, Article 37 of this Decree shall apply to tax periods from July 2025 or the third quarter of 2025.”

Accordingly, Decree No. 359/2025/NĐ-CP abolishes all provisions related to the condition that the seller must have declared and paid VAT in order for the buyer to be eligible for a VAT refund.

4. Exemption from the condition that the seller must have declared and paid VAT for input invoices issued before 01 January 2026

Pursuant to Clause 2, Article 2 of Decree No. 359/2025/NĐ-CP, the implementing provisions are as follows:

“Implementation provisions

  1. This Decree shall take effect from 01 January 2026.
  2. Business entities eligible for VAT refunds under Article 15 of the Law on Value Added Tax that have submitted VAT refund application dossiers and such dossiers have been received by the tax authority before 01 January 2026, but for which the tax authority has not yet issued a VAT refund decision or a VAT refund decision combined with state budget offset, shall not be required to satisfy the condition that the seller has declared and paid VAT for invoices issued to the refund-claiming business entity.”

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