How to issue VAT reduction invoices according to Decree 72 in Vietnam?

How to issue VAT reduction invoices according to Decree 72 in Vietnam?

Pursuant to Clauses 3 and 4 of Article 1 of Decree 72/2024/ND-CP, regulations on the sequence and procedures for VAT reduction are as follows:

VAT Reduction

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3. Sequence and procedures for implementation

a) For business establishments specified at point a, clause 2 of this Article, when issuing VAT invoices for goods and services subject to VAT reduction, at the VAT rate line, write "8%"; VAT amount; total amount payable by the buyer. Based on the VAT invoice, the selling business establishment declares the output VAT, and the buying business establishment declares VAT deduction on the amount reduced as recorded on the VAT invoice.

b) For business establishments specified at point b, clause 2 of this Article, when issuing sales invoices for goods and services subject to VAT reduction, in the "Total amount" column, fully record the amount before reduction. In the "Total goods, services amount" line, write the reduced amount corresponding to a 20% reduction of the percentage rate on revenue, with a note: "reduced... (amount) equivalent to 20% of the percentage rate to calculate VAT according to Resolution No. 142/2024/QH15".

4. For business establishments specified at point a, clause 2 of this Article, when selling goods, providing services with different tax rates, the VAT invoice must clearly record the tax rate of each good or service as prescribed in clause 3 of this Article.

For business establishments specified at point b, clause 2 of this Article, when selling goods, providing services, the sales invoice must clearly record the amount reduced as prescribed in clause 3 of this Article.

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Thus, when issuing VAT invoices, the VAT reduction is recorded as follows:

- For business establishments calculating VAT using the deduction method:

+ At the tax rate line: Write 8%

+ Fully record: VAT amount and total amount payable by the buyer.

If the business establishment sells goods, provides services with different tax rates, the VAT invoice must clearly record the tax rate of each good or service in accordance with the procedures for issuing invoices.

- For business establishments (including individual households and business individuals) calculating VAT using the percentage method on revenue:

+ In the "Total amount" column: Fully record the amount before reduction.

+ In the "Total goods, services amount" line: Write the reduced amount corresponding to a 20% reduction of the percentage rate on revenue, with a note: "reduced... (amount) equivalent to 20% of the percentage rate to calculate VAT according to Resolution No. 142/2024/QH15".

If the business establishment sells goods, provides services, the sales invoice must clearly record the reduced amount in accordance with the procedures for issuing invoices.

How to issue VAT reduction invoices according to Decree 72 in Vietnam?​ (Image from the Internet)

What are the VAT reduction rate and goods subject to VAT reduction according to Decree 72 in Vietnam?

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

(1) VAT Reduction Rate

- Business establishments calculating VAT using the deduction method are applied a VAT rate of 8% for goods and services specified in clause 1 of Article 1 of Decree 72/2024/ND-CP.

- Business establishments (including individual households and business individuals) calculating VAT using the percentage method on revenue are reduced by 20% of the percentage rate to calculate VAT when issuing invoices for goods and services subject to VAT reduction specified in clause 1 of Article 1 of Decree 72/2024/ND-CP.

(2) Goods and Services Not Subject to VAT Reduction in 2024

According to Article 1 of Decree 72/2024/ND-CP, VAT is reduced for 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 prefabricated metal products, mining products (excluding coal mining), coke, refined petroleum products, chemical products.

Details in Appendix 1 issued with Decree 72/2024/ND-CP

- Products and services subject to special consumption tax.

Details in Appendix 2 issued with Decree 72/2024/ND-CP

- Information technology according to the law on information technology.

Details in Appendix 3 issued with Decree 72/2024/ND-CP

- The VAT reduction for each type of goods and services specified in clause 1 of Article 1 of Decree 72/2024/ND-CP is uniformly applied at the stages of import, production, processing, and commercial business. For coal extracted and sold (including cases where extracted coal is processed, sorted, and classified according to a closed process before selling), it is subject to VAT reduction. Coal items in Appendix I issued with Decree 72/2024/ND-CP at other stages beyond selling the extracted coal are not subject to VAT reduction.

Corporations and economic groups that perform a closed process before selling are also subject to VAT reduction for extracted coal.

In cases where goods and services listed in Appendices 1, 2, and 3 issued with Decree 72/2024/ND-CP are subject to non-VAT or 5% VAT as prescribed by the Law on VAT, then follow the VAT Law regulations and do not apply VAT reduction.

What is the deadline for application of 8% VAT reduction in Vietnam?

According to the provisions stipulated in clause 1 of Article 2 of Decree 72/2024/ND-CP:

Effective date and implementation

1. This Decree takes effect from July 1, 2024, to the end of December 31, 2024.

2. Ministries and provincial and city People's Committees should direct relevant agencies to disseminate, guide, inspect, and monitor to ensure consumers understand and benefit from the VAT reduction stipulated in Article 1 of this Decree, focusing on solutions to stabilize the supply and demand of goods and services subject to VAT reduction to maintain price stability (before VAT) from July 1, 2024, to the end of December 31, 2024.

3. During implementation, if issues arise, the Ministry of Finance should provide guidance and resolution.

4. Ministers, heads of ministerial-equivalent agencies, heads of agencies under the Government of Vietnam, and chairpersons of provincial and city People's Committees, as well as related enterprises, organizations, and individuals, are responsible for implementing this Decree.

Decree 72/2024/ND-CP takes effect from July 1, 2024, to the end of December 31, 2024.

This means that the regulation reducing VAT to 8% is only applicable until December 31, 2024.

From January 1, 2025, the VAT rate for the reduced goods and services will revert to 10% (if there is no other governing document).