Key Changes To VAT Regulations

KEY UPDATES IN CIRCULAR NO. 69/2025/TT-BTC COMPARED TO 

PREVIOUS REGULATIONS - CIRCULAR 219

I.            Overview of Circular No. 69/2025/TT-BTC

Circular No. 69/2025/TT-BTC (hereinafter referred to as “Circular 69”) was promulgated by the Ministry of Finance on 01 July 2025 to provide detailed guidance on the implementation of the Law on Value-Added Tax (VAT) 2024 and Decree No. 181/2025/ND-CP. This Circular takes effect from 01 July 2025 and fully replaces the previous system of guiding documents, most notably Circular No. 219/2013/TT-BTC and its subsequent amendments and supplements.

The primary objective of Circular 69 is to clarify provisions under the Law and Decree, with particular emphasis on the following matters:

·            Documentation and procedures for determining non-taxable subjects and application of the 0% VAT rate.

·            VAT obligations applicable to foreign contractors.

·            Detailed methodology for calculating refundable VAT on exported goods and goods subject to the 5% VAT rate.

II.          Analysis of Key Updates and Notable Changes

Circular 69 not only updates provisions to align with the new Law and Decree but also introduces significant reforms in tax administration and enforcement.

1.           Consolidation of Foreign Contractor Tax (FCT) Provisions into VAT Guidance

New Content: Article 9 of Circular 69 dedicates a comprehensive section to VAT applicable to foreign organizations and individuals conducting business in Vietnam (commonly referred to as foreign contractor tax). These provisions include applicable subjects, exemptions, methods for determining taxable revenue, and percentage rates for calculating VAT on such revenue.

Comparison with Previous Regulations: Previously, FCT (including both VAT and corporate income tax components) was governed separately under Circular No. 103/2014/TT-BTC. Circular 69 officially repeals all VAT-related provisions under Circular 103.

Change Analysis:

• Purpose: This consolidation aims to streamline and simplify the legal framework. Instead of referencing two separate circulars (219 and 103), businesses now only need to consult Circular 69 for comprehensive VAT guidance, including transactions involving foreign contractors.

• Impact: This represents a positive administrative reform, facilitating easier legal reference and application, reducing errors and compliance risks, and enhancing policy consistency.

2.           Standardization and Clarification of VAT Refund Calculation Formulas

New Content: Circular 69 introduces Appendices II and III, which provide specific and detailed mathematical formulas for determining refundable input VAT in two primary cases:

• Exported goods and services (Appendix II).

• Production of goods and services subject to the 5% VAT rate (Appendix III).

These formulas clearly guide the allocation of shared input VAT between export and domestic consumption activities based on revenue ratios. Notably, they also account for prior-period adjustments, enhancing calculation accuracy.

Comparison with Previous Regulations: Circular 219/2013/TT-BTC also stipulated the principle of allocating shared input VAT based on revenue ratios, but did not present standardized or detailed formulas as found in Circular 69. This occasionally led to inconsistent interpretations between taxpayers and tax authorities.

Change Analysis:

Purpose: To standardize refund calculations, ensuring transparency and consistency in determining refundable VAT amounts. This helps eliminate unnecessary disputes during audit and refund review processes.

Impact:

• For Enterprises: Enables more confident and accurate preparation of refund dossiers, facilitating better financial planning and cash flow management.

• For Tax Authorities: Adoption of standardized formulas expedites refund dossier review, enhances objectivity and efficiency, reduces administrative burden, and shortens refund processing time.

3.           Reform of Procedures for Determining Non-Taxable Subjects and 0% VAT Rate Application

New Content: Circular 69 stipulates that, in principle, taxpayers are responsible for self-determining whether their goods or services fall under non-taxable categories or qualify for the 0% VAT rate, based on the provisions of the Law and Decree. However, upon request by competent authorities, taxpayers must be able to present specific legal documentation to substantiate their claims.

Examples:

-             For imported newspapers and books exempt from VAT: A certificate of importation of published materials is required.

-             For transfer of industrial property rights: A protection title and transfer agreement must be provided.

Comparison with Previous Regulations: Earlier regulations occasionally caused confusion regarding the necessity of submitting or obtaining prior confirmation of certain documents.

Change Analysis:

-             Purpose: This reform aligns with the modern tax administration approach, shifting from “pre-audit” to “post-audit” mechanisms.

-            Impact: Enhances enterprise autonomy and accountability. Businesses are no longer required to undergo extensive pre-confirmation procedures, saving time and costs. However, this also necessitates a high level of compliance awareness, with proper documentation and records maintained for potential inspection or audit.

III.       Conclusion

Circular No. 69/2025/TT-BTC represents a systematic and breakthrough guidance document. Its changes not only clarify new provisions under the Law and Decree but also reflect a shift in tax administration philosophy—toward greater transparency, standardization, and taxpayer responsibility. The consolidation of foreign contractor tax provisions and the standardization of VAT refund formulas are particularly noteworthy, promising to enhance the efficiency and ease of VAT compliance and administration in the coming period.