Are cars having fewer than 24 seats subject to a value-added tax rate of 8% or 10% in Vietnam?
Are cars having fewer than 24 seats subject to a value-added tax rate of 8% or 10% in Vietnam?
Based on Appendix II issued with Decree 180/2024/ND-CP, which specifies the list of goods subject to special consumption tax not eligible for a reduction in value-added tax, including:
- Cigarettes, cigars, and other products from tobacco plants used for smoking, inhaling, chewing, sniffing, and sucking;
- Alcohol;
- Beer;
- cars having fewer than 24 seats, including those designed to carry both passengers and goods with two or more rows of seats and a permanent partition between the passenger compartment and the cargo area;
- Two-wheeled and three-wheeled motorcycles with a cylinder capacity of over 125 cm3;
- Aircraft, yachts;
- All types of gasoline;
- Air conditioners with a capacity of up to 90,000 BTU;
- Playing cards;
- Votive paper products.
Therefore, cars having fewer than 24 seats are classified as goods not eligible for the 2% value-added tax reduction, making the value-added tax rate for these automobiles 10%.
Are cars having fewer than 24 seats subject to a value-added tax rate of 8% or 10% in Vietnam? (Image from the Internet)
Which goods and services are not eligible for the 2% value-added tax reduction in Vietnam?
Pursuant to Clause 1, Article 1 of Decree 180/2024/ND-CP, which stipulates the entities not eligible for a 2% value-added tax reduction as follows:
Value-Added Tax Reduction
1. Reducing value-added tax for groups of goods and services currently subject to a 10% tax rate, except for the following groups:
a) Telecommunications, financial activities, banking, securities, insurance, real estate business, metals and metal products, mining products (excluding coal mining), coke, refined petroleum, and chemical products. Details in Appendix I issued with this Decree.
b) Products and services subject to special consumption tax. Details in Appendix II issued with this Decree.
c) Information technology as per the law on information technology. Details in Appendix III issued with this Decree.
d) The reduction of value-added tax for each type of goods and service as prescribed in Clause 1 of this Article is uniformly applied at stages of importation, production, processing, and commercial business. For extracted coal sold (including cases where extracted coal is subsequently screened and classified through a closed process before being sold), it is eligible for a value-added tax reduction. Coal products listed in Appendix I issued with this Decree, at stages other than the extraction sale stage, are not eligible for a value-added tax reduction.
Corporations and economic groups that perform a closed process before sale are also eligible for a value-added tax reduction for extracted coal sold.
In case goods and services mentioned in Appendices I, II, and III issued with this Decree belong to entities not subject to value-added tax or entities subject to a 5% value-added tax under the provisions of the Law on Value-Added Tax, they shall comply with the provisions of the Law on Value-Added Tax and shall not be eligible for a value-added tax reduction.
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As such, the goods and services not eligible for a 2% reduction in value-added tax include:
- Telecommunications, financial activities, banking, securities, insurance, real estate business, metals and metal products, mining products (excluding coal mining), coke, refined petroleum, and chemical products. Details in Appendix I issued with Decree 180/2024/ND-CP.
- Products and services subject to special consumption tax. Details in Appendix II issued with Decree 180/2024/ND-CP.
- Information technology as per the law on information technology. Details in Appendix III issued with Decree 180/2024/ND-CP.
- Coal products listed in Appendix I issued with Decree 180/2024/ND-CP, at stages other than the extraction sale stage are not eligible for a value-added tax reduction.
How long is the 2% value-added tax reduction period under Decree 180 in Vietnam?
Based on Clause 2, Article 2 of Decree 180/2024/ND-CP, stipulating the effective date and implementation as follows:
Effective Date and Implementation
- This Decree takes effect from January 1, 2025, to June 30, 2025.
- Ministries according to their functions, duties, and the People's Committees of provinces and centrally run cities shall direct relevant agencies to deploy, propagate, guide, inspect, and supervise so that consumers understand and benefit from the value-added tax reduction stipulated in Article 1 of this Decree, focusing on solutions to stabilize the supply and demand of goods and services eligible for value-added tax reduction in order to stabilize market prices (prices before value-added tax) from January 1, 2025, until June 30, 2025.
- In the process of implementation, if any difficulties arise, the Ministry of Finance shall provide guidance and resolution.
- Ministers, Heads of Ministerial-level agencies, Heads of agencies under the Government of Vietnam, Chairpersons of People's Committees of provinces and centrally-run cities, and relevant enterprises, organizations, and individuals are responsible for implementing this Decree.
According to the above regulations, the period for a 2% value-added tax reduction under Decree 180 is from January 1, 2025, until June 30, 2025.
