The VAT reduction from 10% to 8% continues to apply in 2026 — but not every good or service qualifies. Under Decree 174/2025/ND-CP, two groups of goods and services are excluded and remain at 10%.
This article helps businesses determine exactly which items qualify for the 8% rate in 2026.
1. Policy framework: 2-point cut until 31 December 2026
Under Article 1.1 of Decree 174/2025/ND-CP, from 1 July 2025 through 31 December 2026, VAT is reduced from 10% to 8% for groups of goods and services currently subject to the 10% rate, except certain groups.
The underlying principle under VAT Law 48/2024/QH15 (Article 9): the 10% rate applies to goods and services not subject to the 0% or 5% rates. Only items currently at 10% are eligible for reduction — items that are VAT-exempt or at 5% stay as they are, with no further cut.
2. Goods and services NOT eligible (remain at 10%)
Under Decree 174/2025/ND-CP, two groups are excluded from the reduction to 8%:
- Group 1 (Appendix I): telecommunications; finance, banking, securities and insurance activities; real estate business; metal products; mining products (except coal);
- Group 2 (Appendix II): goods and services subject to special consumption tax (except petrol) — under the Special Consumption Tax Law 66/2025/QH15, including tobacco, alcohol, beer, cars under 24 seats, motorcycles over 125cc, aircraft, yachts, large-capacity air conditioners, playing cards, votive paper, sugary soft drinks, nightclubs, massage, karaoke, casinos, betting, etc.
The reduction applies uniformly across import, production, processing and trading stages.
3. Goods and services eligible for 8%
Items currently at the 10% rate and not in the two excluded groups qualify for the 8% rate through 31 December 2026. Typical examples:
- Food & beverage services, accommodation, tourism;
- Passenger transport;
- Garments, footwear, consumer electronics;
- Construction materials, furniture;
- Many other consumer goods and ordinary services currently at 10%.
Businesses using the deduction method apply the 8% rate when invoicing these goods and services.
4. Deadline and risks of wrong-rate invoicing
The 8% policy runs until 31 December 2026 — afterwards the rate reverts to 10% unless a new extension is issued. Businesses should note:
- Invoicing 8% for an excluded item (still 10%) → the invoice must be adjusted, with risk of tax recovery;
- Apply the correct rate at the time the supply of goods or services is completed;
- Cross-check goods/service codes against Appendices I and II of Decree 174/2025/ND-CP before applying.
5. Frequently asked questions
Q: What VAT rate applies to restaurant services in 2026?
A: 8% — food & beverage services are not among the excluded groups under Decree 174/2025/ND-CP, so the 8% rate applies through 31 December 2026.
Q: Does selling passenger cars in 2026 qualify for the cut to 8%?
A: No — cars under 24 seats are subject to special consumption tax (Appendix II) and remain at the 10% VAT rate.
Q: What is the rate after 31 December 2026?
A: Under current rules, the reduction ends 31 December 2026; from 1 January 2027 items revert to 10%, unless a new extension is issued.
Need to review the VAT rates applicable to your goods and services? Contact us for advice.
This article was prepared by the FLAW AI Legal Council. The content is pending QA Council review before submission for approval; it is for reference only and does not replace legal advice for your specific situation.