The Ministry of Finance is drafting a Decree on the value-added tax (VAT) reduction policy pursuant to the Resolution on VAT reduction from July 1, 2024, to December 31, 2024, which is currently open for public consultation (hereinafter referred to as the draft Decree).
The draft Decree proposes the following VAT reduction for groups of goods and services:
- VAT reduction for goods and services currently subject to a 10% VAT rate, excluding the following:
+ Telecommunications, financial activities, banking, securities, insurance, real estate business, metals and metal products, mining products (excluding coal mining), coke, refined petroleum, and chemical products. Detailed in Appendix I attached to the draft Decree.
+ Goods and services subject to special consumption tax. Detailed in Appendix II attached to the draft Decree.
+ Information technology according to IT law. Detailed in Appendix III attached to the draft Decree.
+ VAT reduction for each type of goods and services specified in Clause 1, Article 1 of the draft Decree will be uniformly applied at all stages: importation, production, processing, and commercial business. For mined coal sold (including coal mined and then screened, classified through a closed process), VAT reduction applies. Coal listed in Appendix I of the draft Decree at stages other than mining and sale does not receive VAT reduction.
General corporations and economic groups that follow a closed process are also subject to VAT reduction for mined coal sold.
If goods and services listed in Appendices I, II, and III attached to the draft Decree are not subject to VAT or are subject to a 5% VAT according to the 2008 VAT Law, the provisions of the 2008 VAT Law will apply, and no VAT reduction will be granted.
- VAT Reduction Rate:
+ Business establishments calculating VAT by the credit method will apply an 8% VAT rate for goods and services specified in Clause 1, Article 1 of the draft Decree.
+ Business establishments (including household businesses and individual businesses) calculating VAT by the percentage method on revenue will receive a 20% reduction in the percentage rate for calculating VAT when issuing invoices for goods and services eligible for VAT reduction specified in Clause 1, Article 1 of the draft Decree.
- Procedures:
+ For business establishments mentioned in Point a, Clause 2, Article 1 of the draft Decree, when issuing VAT invoices for goods and services subject to VAT reduction, the VAT rate line should state "8%"; VAT amount; and the total amount payable by the buyer. Based on the VAT invoice, the selling business establishment will declare output VAT, and the purchasing business establishment will declare input VAT deduction according to the reduced tax amount stated on the VAT invoice.
+ For business establishments mentioned in Point b, Clause 2, Article 1 of the draft Decree, when issuing sales invoices for goods and services subject to VAT reduction, the "Amount" column should record the full amount of goods and services before the reduction, and the "Total goods and services amount" line should reflect the amount after a 20% reduction in the percentage rate on revenue, with a note: “reduced by ... (amount) corresponding to a 20% reduction in the percentage rate for calculating VAT according to Resolution No. .../2024/QH15.”
The draft Decree is proposed to take effect from July 1, 2024, to December 31, 2024.
