Is nightclub operation eligible for VAT reduction in Vietnam under Decree 72?

What is a nightclub operation in Vietnam?

nightclub operation is defined according to Clause 2, Article 2 of Decree 54/2019/ND-CP as a service providing dancefloors, stages, sound, and lighting for dance activities, singing, or art performances at establishments qualified to operate nightclub operations according to this Decree.

Is nightclub operation eligible for VAT reduction in Vietnam under Decree 72?

According to Point a, Clause 2, Article 2 of the Law on Special Consumption Tax 2008, nightclub operation is one of the services subject to special consumption tax.

Reduction of value-added tax (VAT) for groups of goods and services currently applying the 10% tax rate, except for the groups regulated in Clause 1, Article 1 of Decree 72/2024/ND-CP as follows:

VAT Reduction

1. Reduction of VAT for groups of goods and services currently applying the 10% tax rate, except for the following goods and service groups:

a) Telecommunications, financial activities, banking, securities, insurance, real estate business, metals and products made from pre-fabricated metals, mineral products (excluding coal exploitation), coke, refined petroleum, chemical products. Details in Appendix I issued with this Decree.

b) Goods products and services subject to special consumption tax. Details in Appendix II issued with this Decree.

c) Information technology according to the law on information technology. Details in Appendix III issued with this Decree.

d) The VAT reduction for each type of goods and services stipulated in Clause 1 of this Article is uniformly applied at the stages of import, production, processing, and commercial business. For coal sold after extraction (including cases where coal is extracted and then screened, classified under a closed process before being sold) subject to VAT reduction. Coal commodities stipulated in Appendix I issued with this Decree, at stages other than extraction for sale are not entitled to VAT reduction.

Corporations, economic groups conducting a closed process for sale are also entitled to VAT reduction for coal sold after extraction.

In cases of goods, services mentioned in Appendices I, II, and III issued with this Decree not subject to VAT or subject to a VAT rate of 5% according to the VAT Law, the provisions of the VAT Law apply without any VAT reduction.

2. VAT Reduction Rate

a) Business establishments calculating VAT by the deduction method are applied a VAT rate of 8% for goods and services stipulated in Clause 1 of this Article.

b) Business establishments (including business households and individuals) calculating VAT by the percentage method on turnover are entitled to a reduction of 20% of the percentage rate to calculate VAT when issuing invoices for goods and services entitled to VAT reduction as stipulated in Clause 1 of this Article.

To be specific, nightclub operation falls under Appendix II listing goods and services subject to special consumption tax and is not eligible for a VAT rate reduction under Decree 72/2024/ND-CP.

Additionally, the applicable VAT rate for the nightclub operation is 5% according to the Appendix Table of occupational categories for VAT calculation by percentage on turnover issued together with Circular 219/2013/TT-BTC.

Thus, companies operating in the nightclub operation, subject to special consumption tax, are not eligible for an 8% VAT reduction according to Decree 72/2024/ND-CP.

Note: Appendix II listing goods and services subject to special consumption tax not eligible for VAT reduction (excluding goods and services not subject to special consumption tax).

Is nightclub operation eligible for VAT reduction in Vietnam under Decree 72? (Image from Internet)

What are regulations on duration of VAT 8% reduction in Vietnam under Decree 72/2024/ND-CP?

According to regulations in Article 2 of Decree 72/2024/ND-CP as follows:

Effective Date and Implementation

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

2. Ministries, within their functions and duties, and the People's Committees of provinces and centrally-run cities direct related agencies to implement dissemination, guidance, inspection, and supervision for consumers to understand and benefit from the VAT reduction provisions in Article 1 of this Decree, focusing on stabilizing supply and demand of goods and services subject to VAT reduction to maintain a stable level in the market price system (prices excluding VAT) from July 1, 2024, to December 31, 2024.

Thus, the duration for VAT reduction of 8% under Decree 72/2024/ND-CP spans from July 1, 2024, to December 31, 2024.