Vietnam’s paper industry is urging the government to reform tax and regulatory policies affecting the domestic waste paper supply chain, warning that current administrative requirements are increasing raw material costs and weakening the competitiveness of locally recycled fiber.

According to the Vietnam Paper and Pulp Association (VPPA), the industry’s reliance on recovered paper continues to grow as demand for packaging paper expands alongside e-commerce, exports and the transition away from plastic packaging.

Packaging Paper Drives Industry Growth

Vietnam produced approximately 6.34 million tonnes of paper in 2025, while domestic consumption reached an estimated 7.77 million tonnes, representing a 10.8% increase compared with the previous year.

Packaging grades accounted for more than 80% of total paper production, making recycled fiber an increasingly important raw material for domestic manufacturers.

The industry currently recycles more than 3.5 million tonnes of waste paper annually, helping reduce landfill disposal, conserve natural resources and lower greenhouse gas emissions while supporting employment throughout the recycling sector.

Fragmented Collection System Creates Compliance Challenges

Unlike many manufacturing industries, Vietnam’s recovered paper supply depends on a highly fragmented network of individual collectors, collection stations, traders and recycling businesses.

Many small-scale collectors operate without formal business registration, electronic invoicing systems or digital payment methods.

Industry representatives say this creates significant documentation challenges for paper manufacturers, which must maintain tax records despite purchasing recovered paper through thousands of small transactions.

According to Hải Phòng-based HHP GLOBAL JSC, waste paper may pass through hundreds or even thousands of transactions before reaching a recycling mill.

The company said requiring complete invoices, seller documentation and payment records for every transaction creates an administrative burden that does not reflect the practical operation of the recycling market.

VAT Rules Affect Competitiveness of Domestic Fiber

Paper manufacturers also raised concerns over differences in value-added tax (VAT) treatment between domestically collected and imported waste paper.

Under existing tax rules, purchases from many domestic suppliers operating under the direct tax method generally do not allow manufacturers to separately deduct input VAT.

In contrast, imported recovered paper may qualify for VAT deductions when companies meet the applicable legal requirements and retain the necessary import documentation.

Industry representatives argue that the differing tax treatment can increase the cost of domestic recycled fiber, potentially making imported waste paper more competitive despite national policies supporting circular economy development.

Industry Proposes Centralized Tax System

To simplify compliance, the industry has proposed introducing a centralized tax declaration and withholding mechanism for waste paper purchases.

Under the proposal, manufacturers purchasing recovered paper from individuals or household businesses would:

• Generate electronic purchase records
• Collect seller identification information
• Maintain delivery and weighing documentation
• Declare and pay taxes on behalf of suppliers under existing tax rates

Industry representatives believe the system would improve tax compliance while reducing administrative burdens for both recycling companies and small-scale collectors.

The sector is also seeking changes that would allow manufacturers to deduct input VAT using electronic purchase documentation or sales invoices issued under the direct tax method.

Environmental Deposit Rules Also Under Review

Paper producers are additionally calling for reforms to environmental protection requirements governing imported recovered paper.

Current regulations require companies importing waste paper to make environmental protection deposits ranging from 15% to 20% of shipment value, depending on the applicable category.

Manufacturers are requesting:

• Lower deposit rates
• Faster refund procedures
• Risk-based supervision linked to compliance history

Industry representatives argue that companies with strong environmental records should qualify for reduced financial requirements, while stricter controls remain focused on higher-risk importers.

Recycling Policies Key to Circular Economy Goals

For Vietnam’s paper industry, recovered paper remains one of the most important raw materials supporting packaging production and circular manufacturing.

As packaging demand continues to increase, manufacturers argue that reducing administrative complexity and improving the competitiveness of domestic recycled fiber will be essential to strengthening local supply chains, encouraging resource efficiency and supporting the country’s broader circular economy and sustainability objectives.

Last Updated on 31/07/2026 by Jota Machinery