A central objective of Vietnam’s tax reform in 2024 was upgrading the tax system to improve efficiency and compliance. This included enhancing digital platforms for easier tax reporting and payment, which streamlined the process for businesses and individuals.

Nguyen Hai Minh(left) and Nguyen Thi Hong Hoa of Tax Advisory Services at Forvis Mazars Vietnam

As e-commerce and online businesses continue to expand in Vietnam, the government introduced measures to ensure these platforms contribute fairly to tax revenue. New regulations now require e-commerce platforms to facilitate tax collection on behalf of online individual sellers, ensuring that transactions are properly taxed.

Last year also saw tightened controls on petroleum sales. The petroleum sector, vital to Vietnam’s economy, was another area where the government increased oversight. In 2024, tighter control over petroleum sales invoices aimed to prevent tax evasion and improve transparency.

The real estate market, often prone to tax avoidance due to its complexity, was another target of reform. New rules were introduced to improve transparency and ensure proper taxation on real estate transactions. By enforcing stricter reporting standards and transaction tracking, the government aimed to close loopholes and capture tax revenue from the sector.

New legislation introduced

A major development in 2024 was the introduction of a new Law on VAT, alongside the amendment of nine other laws to better align with global standards. These changes sought to simplify VAT compliance and increase tax fairness across sectors.

The Law on VAT, after several revisions to the draft, including three rounds of public consultation, was issued in November and will take effect from July 2025. Due to differing opinions and suggestions for further amendments, the official implementation date has been postponed by six months compared to the original schedule.

We observed some appropriate changes in the law. Regarding the VAT rate of zero per cent, it has received significant correspondence from the business community. In the spirit of openness, the VAT Law retained the applicability of export services.

Regarding VAT refund regulations, this law supplements the provisions for VAT refunds, including the 5 per cent tax rate group and investing expansions. This change is considered appropriate and also expanding the cases eligible for VAT refunds, helping the taxpayers’ cashflow.

On handling input VAT errors, the regulations have clarified and allowed for supplementary declarations in the tax period when errors are detected, as long as the errors do not increase the payable tax or decrease the refundable tax. This helps reduce the administrative burden on taxpayers compared to having to amend in the original tax period.

Another significant aspect of the 2024 reforms was the draft of a new corporate income tax law, which introduced numerous changes. A key highlight was the implementation of the global minimum tax (GMT), in line with international tax standards, where the National Assembly (NA) also introduced rules in late 2023 to make the requirement effective in fiscal year 2024. The draft law also considers potential changes to taxation on capital gains tax of foreign corporate investors.

Additionally, Vietnam’s proposal to increase the special consumption tax (SCT) on alcohol from 2026 to 2030 is currently under discussion at the NA. The Ministry of Finance has outlined two options for gradual tax hikes, aimed at improving public health and increasing state revenue. The expected gains include reduced alcohol consumption, which could help address public health issues, as well as additional funds for healthcare and social programmes.

However, the SCT proposal also raises concerns, including potential negative impacts on businesses in the alcohol industry, reduced profitability, job losses, and a possible rise in illicit alcohol consumption. As the proposal moves forward, it is hoped that the NA will consider both the benefits and challenges, providing positive feedback and taking balanced action to ensure the policy’s success.

Business expectations

With proposed tax system reforms starting in 2025 and a vision towards 2030, both domestic and foreign business communities have high expectations for tax policy changes that will establish a favourable business environment, lower costs, and ensure the sustainable development of enterprises.

Tax authorities should apply and interpret the regulations flexibly, avoiding the idea of maximising the tax collection. For example, violations of other specialised regulations should not be used as the basis for tax authorities to assess a business’s tax compliance (for example, the classification of corporate income tax expenses, or delays in VAT refund processes).

Businesses also expect a consultative approach to bring about positive changes in the regulatory system. For example, the application of penalties on each incorrect invoice has recently been deemed to have a significant impact on businesses, especially small- and medium-sized enterprises or those with a large volume of transactions.

Moreover, the tax management system needs to reduce the burden on taxpayers and clearly separate the responsibilities of taxpayers and tax authorities. For instance, managing businesses that are engaged in fraudulent activities or not operating at their registered business locations, or allocating taxes to localities, should be carried out by the tax authorities themselves, rather than the current approach that imposes difficulties and burdens on taxpayers.

The need for reforms

Vietnam’s 2030 vision prioritises emerging sectors such as semiconductors, AI, big data, e-commerce, green energy, and sustainable economic models. To support long-term sustainable growth, the government advocates a balanced approach: harmonising benefits and sharing risks among the state, enterprises, and society.

Insights from neighbouring ASEAN countries, many countries have implemented incentive policies for research and development (R&D) activities and training. For example, Singapore has the Enterprise Innovation Scheme provides tax deductions of up to 400 per cent or cash payouts for R&D and workforce training expenses; and Indonesia allows deductions of up to 300 per cent for qualifying R&D and education-related expenditures.

Vietnam also clearly demonstrated its commitment to ensuring investment, particularly in response to the implications of the GMT mechanism, by adopting an investment support fund for enterprises involved in high-tech sectors or those with projects developing R&D centres.

Malaysia offers a green investment tax allowance which covers all the eligible costs and exempts up to 70 per cent of income from solar panel rental. This is also an example that Vietnam can consider in order to encourage the development of green energy.

The government’s support for businesses must be demonstrated through the development and effective management of attractive, transparent investment incentive policies aligned with international practices and standards. These incentive policies should be reviewed, adjusted, or newly designed to align with key sectors and priority areas of development

The business environment in Vietnam is increasingly improving, marking a shift into a new era. Businesses are confident that institutional reforms in general, and tax procedures in particular, will bring significant achievements for the country.