Vietnam's Tax System and Structure in 2025

Vietnam maintains a centralized tax system where both legislative authority and tax collection are managed at the national level. All tax laws must be approved by the National Assembly before implementation. Since the major tax reform initiated in August 1990, Vietnam has consolidated its previously fragmented revenue streams—including state enterprise income, business taxes, and agricultural taxes—into a unified national taxation framework. Over the past three decades, this system has evolved in line with economic growth and social development, forming a comprehensive and increasingly efficient tax regime.

The core legal foundations of Vietnam’s current tax system include the Tax Management Law, the Decree on Implementation Details of Certain Provisions of the Tax Management Law, the Corporate Income Tax Law, the Decree on Administrative Penalties for Tax and Invoice Violations, the Value-Added Tax (VAT) Law, the Special Sales Tax Law, and the Import-Export Tax Law, among other related regulations.

Tax administration in Vietnam is divided between two key agencies under the Ministry of Finance: the General Department of Taxation and the General Department of Customs. The former oversees domestic tax collection, while the latter manages import and export duties. The tax network spans from central to local levels, including provincial, municipal, district, and regional tax offices. Notably, Vietnam does not differentiate between central and local taxes—all revenues flow into the national budget for centralized allocation.

Main Taxes and Rates in Vietnam

As a member of the World Trade Organization (WTO), Vietnam applies uniform tax standards to both domestic and foreign-invested enterprises. However, preferential rates and incentives vary by sector, project type, and investment scale. Key taxes in the current structure include corporate income tax (CIT), value-added tax (VAT), import-export duties, special sales tax, personal income tax (PIT), resource tax, land use taxes (agricultural and non-agricultural), environmental protection tax, stamp duty, and business license fees.

Corporate Income Tax (CIT)

The standard CIT rate in Vietnam is 20%. However, higher rates apply to specific sectors: oil, gas, and rare mineral extraction projects face rates between 32% and 50%. Foreign-invested enterprises that meet eligibility criteria can benefit from reduced rates ranging from 10% to 17%, along with generous incentive packages such as “four years exempt, nine years at half rate” or “six years exempt, thirteen years at half rate.” Projects involving advanced technology or large-scale investments may receive approval from the Prime Minister for up to 30 years of reduced CIT, enhancing long-term profitability.

Value-Added Tax (VAT)

Vietnam operates a tiered VAT system with three primary rates: 0%, 5%, and 10%. Exports and processing activities for export goods are generally zero-rated, supporting international competitiveness. Essential goods and services often fall under the 5% bracket, while most standard taxable supplies are subject to the 10% rate. Proper invoicing and compliance are critical for reclaiming input VAT credits.

Special Sales Tax (SST)

The SST targets luxury, harmful, or environmentally impactful goods and services. Rates vary significantly based on product category:

• Cigarettes: 75%
• Alcohol: 35%–65%, depending on alcohol content (beer taxed at 65%)
• Passenger vehicles (under 9 seats): 35%–150%, based on engine displacement
• Hybrid electric vehicles: 70% of the rate applied to equivalent gasoline models
• Biofuel-powered vehicles: 50% of standard rates
• Luxury entertainment services (e.g., nightclubs, casinos, golf courses): 15%–40%

This tax aims to regulate consumption patterns while generating additional fiscal revenue.

Import and Export Duties

Vietnam revises its tariff schedules annually through the Ministry of Finance. Most imported goods are subject to customs duties unless explicitly exempt. Three main duty rates apply:

• Ordinary Rate: Applied when no preferential agreements exist
• Preferential Rate: For imports from countries granting Vietnam Most Favored Nation (MFN) status; WTO members automatically qualify
• Preferential-Favored Rate (FTA Rate): Reserved for goods originating from nations with which Vietnam has signed Free Trade Agreements (FTAs), such as ASEAN, South Korea, Japan, the EU, and the UK

To claim FTA benefits, importers must submit a valid Certificate of Origin (C/O). Failure to provide one results in application of the ordinary rate—typically set at 150% of the preferential rate. This underscores the importance of supply chain documentation and origin management.

Personal Income Tax (PIT)

Since July 1, 2020, the tax-free threshold for individuals has increased from VND 9 million to VND 11 million per month (approximately USD 450). PIT follows a progressive structure ranging from 5% to 35%, calculated on monthly or annual aggregated income. Dependent allowances and certain deductions can reduce taxable income.

Non-resident foreigners are taxed only on Vietnam-sourced income. In their first year, they typically face a flat 25% withholding rate, after which they may transition to resident taxpayer status if qualifying conditions are met. Nationals from countries with double taxation avoidance agreements (DTAAs) with Vietnam may be eligible for exemptions or reduced rates, provided they meet residency and documentation requirements.

Environmental Protection Tax

This tax is levied during production or importation stages on goods contributing to environmental degradation. Key examples include:

• Gasoline, diesel, lubricants: VND 1,000–4,000 per liter/kg
• Coal: VND 15,000–30,000 per ton
• Plastic bags (nylon): VND 50,000 per kg

The policy supports green initiatives and encourages sustainable alternatives across industries.

Non-Agricultural Land Use Tax

Applicable to organizations and individuals using land for non-agricultural purposes, this tax varies by land use type:

• Residential land (including commercial-use homes): Progressive rates based on location and area
• Multifamily buildings, apartments, underground structures: 0.03%
• Commercial and industrial land: 0.03%
• Land used contrary to designated purpose or without proper authorization: 0.15%
• Approved phased investment projects: 0.03%
• Illegally occupied or misused land: 0.2%

Tax assessments are typically made annually, promoting responsible land utilization.

Business License Fee ("Doorplate Fee")

Known locally as the "doorplate fee," this annual charge applies to all businesses post-initial operation year. Rates are determined by charter capital or revenue:

• Enterprises with registered capital over VND 10 billion: VND 3 million/year
• Enterprises with capital under VND 10 billion: VND 2 million/year
• Representative offices, branches, public institutions: VND 1 million/year
• Household businesses: Based on annual turnover

Newly established companies enjoy exemption in their first operational year, easing initial financial burdens.

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