Official VAT Reduction from 10% to 8% from July 1, 2025 to December 31, 2026: More Goods and Services Included

On the morning of June 17, the National Assembly officially passed a resolution on reducing Value-Added Tax (VAT) with overwhelming approval—452 delegates voted in favor, accounting for 94.56% of the total.

According to the resolution, the National Assembly has decided to reduce the VAT rate by 2%, from 10% to 8%, applicable to groups of goods and services currently specified in Clause 3, Article 9 of the VAT Law 2025. However, several sectors will maintain the 10% rate, including: telecommunications, finance – banking, securities, insurance, real estate, metal products, mining (excluding coal), and products subject to special consumption tax (excluding gasoline).

Effective Period:
The resolution is effective from July 1, 2025, to December 31, 2026.

Expanded Scope of Eligible Goods and Services:
Compared to previous resolutions, the scope of VAT-reduced items is now broader. Specifically, sectors such as transportation, logistics, and information technology—which were previously excluded—are now eligible for the preferential 8% rate.

In contrast, fields like education, vocational training, and healthcare are not included in the reduction because they already fall under non-VAT categories.

The government emphasized that sectors such as telecommunications and real estate, which show stable growth and are not significantly affected, will continue to be excluded—consistent with Resolution 43/2022/QH15.

Impact on Budget:
According to the Ministry of Finance, the proposed reduction is expected to decrease budget revenue by approximately VND 121.74 trillion during the second half of 2025 and the whole of 2026.

If VAT were reduced for all goods and services currently taxed at 10%, the revenue loss could reach VND 167 trillion. Hence, the government proposes retaining the current scope to maintain state budget balance.

VAT Rates in 2025:
Under the 2024 VAT Law and Decree 180/2024/ND-CP:

• From January 1 to June 30, 2025: the 8% VAT applies to specific goods and services.

• From July 1, 2025, VAT will follow a four-tier system: 0%, 5%, 8%, and 10%, depending on the item category as prescribed by law.

Non-Taxable Goods and Services from July 1, 2025:
According to Article 5 of the 2024 VAT Law, 26 groups of goods and services are exempt from VAT. Notable examples include:

• Unprocessed agricultural products, salt, breeding stock, and animal feed;

• Medical services, education, vocational training, veterinary services, funeral services;

• Financial – banking services, insurance, securities, capital transfers, debt sales;

• Public transportation by bus and electric train;

• Newspaper publishing, textbooks, currency and coin printing;

• National defense products, humanitarian aid, technology transfer, software;

• Tax-free quota goods, gifts and donations from abroad;

• Goods in bonded warehouses, temporary import – re-export, or non-tariff zones.

Important Note:
Businesses supplying non-VAT goods/services are not entitled to input VAT deductions or refunds—except in cases where the 0% VAT rate applies.

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