Exemption of Seller Conditions for VAT Refunds Filed Before January 1, 2026
New Regulations on Non-VATable Entities
According to Decree 359/2025/NĐ-CP, businesses, cooperatives, and cooperative unions purchasing unprocessed agricultural, forestry, or aquatic products, or those undergoing basic processing, for resale to other businesses, cooperatives, or unions are exempt from VAT declaration and payment. However, they remain eligible for input VAT deductions.
Businesses, cooperatives, and unions subject to VAT under the deduction method, selling unprocessed or minimally processed agricultural, forestry, livestock, or aquatic products to other businesses, cooperatives, or unions in the commercial sector, are not required to declare or pay VAT.
If such entities sell these products to individuals, households, or other organizations, they must apply a 5% VAT rate as per Article 19, Clause 3 of Decree 181/2025/NĐ-CP.
Households, individuals, and other economic entities subject to direct VAT calculation on unprocessed or minimally processed products in the commercial sector must pay VAT at 1% of their revenue.
Removal of a VAT Refund Condition
Removal of a VAT Refund Condition
Decree 359/2025/NĐ-CP repeals Clause 3, Article 37, and Clause 3, Article 39 of Decree 181/2025/NĐ-CP.
Clause 3, Article 37 of Decree 181/2025/NĐ-CP previously stipulated that for a business to be eligible for a VAT refund, the seller must have declared and paid VAT as per regulations for the invoice issued to the refund-requesting business. The conditions were:
– At the time of refund application, the seller must have filed VAT returns and settled any outstanding VAT liabilities for the corresponding tax period.
– Tax authorities verify the seller’s VAT compliance through automated IT systems.
– If the seller has not filed returns or has outstanding VAT for the relevant period, the buyer’s refund request for those invoices is denied.
Clause 3, Article 39 of Decree 181/2025/NĐ-CP previously set a transitional period for these VAT refund conditions, effective from July or Q3 2025.
With Decree 359/2025/NĐ-CP, all seller-related VAT refund conditions are eliminated, regardless of the effective date.
Exemption of Seller Conditions for VAT Refunds Filed Before January 1, 2026
Clause 2, Article 2 of Decree 359/2025/NĐ-CP states: “Businesses eligible for VAT refunds under Article 15 of the VAT Law, who filed refund applications before January 1, 2026, but have not received a refund decision, are exempt from the condition requiring sellers to have declared and paid VAT for the input invoices.”
Thus, under Decree 359/2025/NĐ-CP, VAT refund applications submitted before January 1, 2026, but not yet approved, are no longer subject to seller VAT compliance conditions for input invoices.
Despite Tax Exemption from 2026, Household Businesses with Annual Revenue Under 200 Million VND Must Still Comply to Avoid Fines Up to 12,500,000 VND
As of January 1, 2026, goods and services provided by households and individuals with an annual revenue of VND 200 million or less will remain exempt from VAT and personal income tax.
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