How long is the effective period of application of VAT reduction in Vietnam under Decree 72?

How long is the effective period of application of VAT reduction in Vietnam under Decree 72?

On June 30, 2024, the Government of Vietnam issued Decree 72/2024/ND-CP on the policy of reducing value-added tax according to Resolution 142/2024/QH15.

Based on Article 2 of Decree 72/2024/ND-CP, it is stipulated as follows:

Effective Date and Implementation

1. This Decree is effective from July 1, 2024, to the end of December 31, 2024.

2. Ministries according to their functions and tasks, and the People's Committees of provinces and centrally-run cities shall direct relevant agencies to propagate, guide, inspect, and supervise so that consumers understand and benefit from the reduction of value-added tax stipulated in Article 1 of this Decree, focusing on solutions to stabilize the supply and demand of goods and services subject to value-added tax reduction to maintain market price stability (price excluding value-added tax) from July 1, 2024, to the end of December 31, 2024.

3. If obstacles arise during implementation, the Ministry of Finance shall provide guidance and resolve them.

4. The Ministers, Heads of ministerial-level agencies, Heads of agencies under the Government of Vietnam, Chairpersons of the People's Committees of provinces, centrally-run cities, and relevant enterprises, organizations, and individuals are responsible for implementing this Decree.

According to the above provisions, the VAT reduction period under Decree 72 is from July 1, 2024, to the end of December 31, 2024. After this period, the entities receiving a VAT reduction will revert to the old tax rate as stipulated in the Law on Value-Added Tax 2008 unless a new directive is issued.

This means that Decree 72 of 2024 officially ceases to be effective and applicable from January 1, 2025.

As of now, the Government of Vietnam has submitted to the National Assembly a Draft Resolution to reduce VAT by 2% for the first 6 months of 2025, which is expected to be passed at the 8th session of the 15th National Assembly.

See more: Full text of the Draft Resolution on VAT reduction 2025 Download

How long is the effective period of application of VAT reduction in Vietnam under Decree 72? Which entities are the VAT payers? (Image from the Internet)

Which entities are the VAT payers in Vietnam?

According to the provisions in Article 3 of Circular 219/2013/TT-BTC, VAT payers are organizations and individuals producing and trading goods and services subject to VAT in Vietnam, regardless of industry, type, business organization (hereinafter referred to as business establishments), and organizations and individuals importing goods, purchasing services from abroad subject to VAT (hereinafter referred to as importers), including:

- Business organizations established and registered under the Enterprise Law, the State Enterprise Law (now the Enterprise Law), the Cooperative Law, and other specialized business laws;

- Economic organizations of political organizations, socio-political organizations, social organizations, socio-professional organizations, people's armed units, public service organizations, and other organizations;

- Enterprises with foreign investment capital and foreign parties participating in business cooperation under the Law on Foreign Investment in Vietnam (now the Investment Law); foreign organizations and individuals engaging in business in Vietnam but not establishing a legal entity in Vietnam;

- Individuals, households, independent business groups, and other entities involved in production, business, and import activities;

- Organizations and individuals producing and doing business in Vietnam purchasing services (including services associated with goods) from foreign organizations without a permanent establishment in Vietnam or foreign individuals as non-residents in Vietnam shall be the taxpayers, except for cases not required to declare, calculate, and pay VAT as guided in Clause 2 Article 5 of Circular 219/2013/TT-BTC.

Regulations on permanent establishments and non-resident entities are in accordance with the laws on corporate income tax and personal income tax.

- Branches of export processing enterprises established to engage in the purchase, sale of goods, and activities directly related to the purchase and sale of goods in Vietnam according to the legal regulations on industrial parks, export processing zones, and economic zones.

What is the deadline for submitting monthly and quarterly VAT returns in Vietnam in 2024?

Based on Clause 1, Article 44 of the Law on Tax Administration 2019, it is specified as follows:

Deadline for Submitting Tax returns

1. The deadline for submitting tax returns for taxes declared monthly and quarterly is as follows:

a) No later than the 20th of the following month for cases of monthly tax declaration and payment;

b) No later than the last day of the first month of the following quarter for cases of quarterly tax declaration and payment.

2. The deadline for submitting tax returns for taxes calculated annually is as follows:

a) No later than the last day of the third month from the end of the calendar year or fiscal year for annual tax settlement dossiers; no later than the last day of the first month of the calendar year or fiscal year for annual tax returns;

b) No later than the last day of the fourth month from the end of the calendar year for individual income tax settlement dossiers filed by individuals directly settling tax;

c) No later than December 15 of the preceding year for fixed tax returns of business households and individuals paying tax using the fixed method; in the case of new business households and individuals, the deadline for submitting fixed tax returns is no later than 10 days from the start of business.

3. The deadline for submitting tax returns for taxes declared and paid on a per-arising basis is no later than the 10th day from the occurrence of the tax liability.

4. The deadline for submitting tax returns in case of cessation of activities, contract termination, or business reorganization is no later than the 45th day from the event.

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According to the above regulation, the deadline for submitting VAT returns for monthly and quarterly declarations in 2024 is as follows:

- No later than the 20th of the following month for cases of monthly tax declaration and payment.

- No later than the last day of the first month of the following quarter for cases of quarterly tax declaration and payment.