How long is the VAT reduction period in the rate of 8% in Vietnam?

How long is the VAT reduction period in the rate of 8% in Vietnam?

Pursuant to Article 2 of Decree 72/2024/ND-CP, the provisions are as follows:

Effective duration and implementation guidelines

1. This Decree comes into effect from July 1, 2024, until the end of December 31, 2024.

2. Ministries, in accordance with their functions and responsibilities, and provincial and city People's Committees directly under the central government, shall direct relevant agencies to disseminate, guide, inspect, and monitor so that consumers understand and benefit from the reduction of value-added tax specified 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 (prices excluding value-added tax) from July 1, 2024, until the end of December 31, 2024.

3. During the implementation process, if any issues arise, the Ministry of Finance shall provide guidance and resolve them.

4. Ministers, Heads of equivalent agencies, Heads of agencies under the Government of Vietnam, Chairmen of provincial and city People's Committees directly under the central government, and relevant enterprises, organizations, and individuals are responsible for implementing this Decree.

The Decree on the policy of reducing value-added tax takes effect from July 1, 2024, until the end of December 31, 2024.

Therefore, goods and services subject to the provisions in Article 1 of Decree 72/2024/ND-CP that have their value-added tax reduced to 8% will enjoy this tax reduction from July 1, 2024, until the end of December 31, 2024.

How long is the VAT reduction period in the rate of 8% in Vietnam? (Image from Internet)

Which entities are eligible for the value-added tax reduction to 8% in Vietnam?

Pursuant to Article 1 of Decree 72/2024/ND-CP, the entities eligible for value-added tax reduction are groups of goods and services currently subject to a 10% tax rate, except for the following groups of goods and services:

- Telecommunications, financial activities, banking, securities, insurance, real estate business, metals and fabricated metal products, mining products (excluding coal mining), coke, refined petroleum, chemical products. Details in Annex 1 attached to Decree 72/2024/ND-CP.

- Goods and services subject to excise tax. Details in Annex 2 attached to Decree 72/2024/ND-CP.

- Information technology according to the law on information technology. Details in Annex 3 attached to Decree 72/2024/ND-CP.

- The reduction of value-added tax for each type of goods and services specified in Clause 1 of Article 1 of Decree 72/2024/ND-CP is uniformly applied at import, production, processing, and commercial stages.

For extracted coal sold (including cases where the extracted coal is then screened, classified according to a closed process before being sold) subject to value-added tax reduction. Coal is listed in Annex 1 attached to Decree 72/2024/ND-CP, and non-extractive sales stages are not eligible for value-added tax reduction.

Economy groups, corporations implementing closed processes before selling also belong to the subject of value-added tax reduction for extracted coal sold out.

In cases where goods and services mentioned in Annexes 1, 2, and 3 attached to Decree 72/2024/ND-CP are not subject to value-added tax or are subject to 5% value-added tax according to the Law on Value-Added Tax 2008, it shall follow the provisions of the Law on Value-Added Tax 2008 and no value-added tax reduction shall be applied.

Which entities are subject to value-added tax in Vietnam?

Pursuant to Article 3 of the Law on Value-Added Tax 2008, the provisions on entities subject to value-added tax are as follows:

Taxable entities

Goods and services used for production, business, and consumption in Vietnam are subject to value-added tax, except for the entities specified in Article 5 of this Law.

Therefore, the entities subject to value-added tax are goods and services used for production, business, and consumption in Vietnam (including goods and services purchased from organizations and individuals overseas).

Except for entities not subject to value-added tax specified in Article 5 of the Law on Value-Added Tax 2008.

Note that business establishments of goods and services not subject to value-added tax specified in Article 5 of the Law on Value-Added Tax 2008 are not entitled to input value-added tax deduction and refund, except for cases applying a 0% tax rate specified in Clause 1, Article 8 of the Law on Value-Added Tax 2008.