Foreign investment landscape in Vietnam to undergo transformation due to tax and legal reforms
Vietnam has taken significant steps to address tax base erosion by implementing Decree No.236/2025/ND-CP, which is part of the Organisation for Economic Co-operation and Development's (OECD) Pillar Two framework. This decree targets multinational enterprises (MNEs) with consolidated annual revenues of EUR 750 million or more.
The decree introduces the Qualified Domestic Minimum Top-up Tax (QDMTT) and the Income Inclusion Rule (IIR). MNEs falling under this decree are required to submit comprehensive financial disclosures for compliance.
To ease the transition, relief measures applicable for the fiscal year beginning on or before December 31, 2026, have been incorporated.
Vietnam's tax authorities have been active in enforcing these changes, conducting over 63,000 audits in 2024, resulting in additional tax assessments worth VND16 trillion ($660 million). In the first half of 2025, close to 26,300 audits were conducted, yielding VND8 trillion ($330 million) in collections, marking a 9% increase from the same period last year.
The decree also makes changes to the conditions for Value-Added Tax (VAT) refunds, making them more restrictive. VAT refunds will not be available for goods that are imported and then directly exported or exported under consignment. SST refund policies are also changing, excluding temporary imports and re-exports, and restructuring refunds for exported goods based on actual exported quantities.
Law No.56/2024, effective since January, revises foreign supplier obligations, extending them to entities with permanent establishments in Vietnam. Changes to this law also remove the ability to amend tax returns post tax audit announcement, but allow revisions of unaudited tax returns within 10 years from the filing deadline.
The revised Specific Consumption Tax (SST) law in Vietnam will include sugary beverages and expand tobacco product coverage starting from next year. Rate increases for tobacco products, alcohol, and beer will span until 2031, with phased hikes beginning in 2027.
In addition, the decree recognizes special circumstances such as joint ventures and provides specific methodologies for calculating applicable taxes in these situations. E-platform management entities are required to handle tax matters for business households using these platforms, as per Law No.56/2024, enacted from April.
The decree also targets MNEs with revenues of EUR 750 million or above, and Vietnam has enacted Decree No.236/2025/N D-CP to implement the OECD's Pillar Two Framework.
Tax audits in Vietnam are focusing on transactions with a higher likelihood of underreporting or misclassification. The revised SST rates for automobiles, particularly double-cabin pickup trucks, will take effect in 2026.
In summary, Vietnam has taken significant steps to address tax base erosion by implementing Decree No.236/2025/ND-CP, part of the OECD's Pillar Two framework. The decree targets MNEs with consolidated revenues of EUR 750 million or above, and introduces the QDMTT and the IIR. Relief measures have been incorporated to ease the transition, and tax audits are focusing on transactions with a higher likelihood of underreporting or misclassification.
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