Vietnam Tax Reforms 2026: VAT, PIT, and Administration Updates

The Vietnamese National Assembly adopted three major tax laws that significantly reshape its tax framework, covering tax administration, personal income tax, and VAT. Together, these laws aim to modernize tax compliance, broaden the tax base, and better capture income generated through digital and small-scale business activities. 

Main Amendments to the VAT and Tax Administration Laws

The amended VAT Law, effective from 1 January 2026, introduced significant changes to the VAT regime for households, individuals, and refund applicants. One of the most notable changes is the substantial increase in the annual revenue threshold that triggers VAT liabilities for households and individuals, which rises from VND 100 million (around USD 3,800) to VND 500 million (around USD 19,000).

While this change significantly reduces the number of small businesses required to register for and pay VAT, it does not affect the obligation of specific e-commerce platforms to withhold taxes for individual sellers when they provide ordering and payment functions.

Additaonlly, the amendments abolish the presumptive tax method previously applied to households and individuals engaged in production or business. Also, with the new rule in place, the requirement that sellers must have declared and paid VAT on the invoices issued to a VAT refund applicant, as one of the VAT refund conditions, has been removed.

The amendments to the Administration Law will generally take effect on July 1, 2026, although key provisions affecting taxable persons came into effect on January 1. A central feature of the new law is the expanded and more precise definition of “taxable persons”. Under the new definition, the scope clearly extends beyond traditional taxable persons to include entities liable under other tax laws and those with tax-withholding obligations under tax and tax administration regulations.

Notably, the definition now brings certain foreign organizations and individuals within its scope, including those conducting business activities in Vietnam or earning income from Vietnam, as well as those operating through e-commerce or other digital platforms. Digital platforms, both foreign and domestic, that integrate ordering and payment functions, are responsible for withholding and remitting taxes on behalf of business households and individuals.

Conclusion

The changes to the three tax laws represent a substantial overhaul of Vietnam’s tax framework, with significant implications for businesses and individuals operating in the e-commerce and other digital business sectors. All taxable persons should assess their current tax compliance processes, systems, and contractual arrangements, and adjust their systems and internal policies to meet new rules and requirements.

Source: Baker & McKenzie, VATabout