Vietnam’s New VAT Law Takes Effect, Potentially Impacting Coffee Prices and Export Trade

 According to Coffee Finance News, starting July 1, 2025, Vietnam’s newly effective Value-Added Tax (VAT) law requires certain basic agricultural products—previously exempt from VAT—such as coffee, rice, and seafood, to now be subject to a 5% tax rate.

The Vietnam Food Association stated that this shift has tied up a significant portion of exporters’ working capital due to pending VAT refunds, slowing their ability to purchase basic agricultural products from farmers and affecting domestic prices.

The Vietnam Chamber of Commerce and Industry (VCCI) also noted that while the new VAT law is expected to bring groundbreaking reforms, it has in practice created new obstacles that must be addressed to promote the development of agriculture, forestry, and fisheries.

In the coffee sector, exporters of coffee and tea have expressed concerns over the unclear definition of what constitutes “preliminary processing.”

The Vietnam Coffee and Cocoa Association pointed out that unprocessed coffee beans with high export value are being unfairly taxed at a 5% rate. Meanwhile, coffee exporters often have to wait up to six months to receive payments from buyers in Europe and the Americas, while VAT refund processing times are similarly lengthy. With capital still tied up, this creates a heavy financial burden.

The Vietnam Timber and Forest Products Association added that the lack of clear guidance on what qualifies as “preliminary processing” has caused delays in VAT declarations and refunds. Currently, hundreds of billions of Vietnamese dong are locked up, severely impacting production and exports. They identified three major challenges under the new VAT law: extended refund times, inconsistencies in pre-processed products, and vague definitions that allow for discretionary interpretation.

As Vietnam’s 2025/26 coffee crop season approaches, a new wave of coffee supply and exports is expected. The new VAT law will undoubtedly raise the effective trade costs of Vietnamese coffee beans, potentially driving up coffee prices overall. Domestic coffee traders and roasters are advised to monitor the situation closely.

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