Is perfume eligible for value-added tax reduction in Vietnam in 2024?

Is perfume eligible for value-added tax (VAT) reduction in Vietnam in 2024?

The group of goods and services not eligible for VAT reduction in 2024 is stipulated in Clause 1, Article 1 of Decree 72/2024/ND-CP regarding VAT reduction policies as follows:

* Reduction of VAT for groups of goods and services currently applying a 10% tax rate, except for the following groups of goods and services:

[1] Telecommunications, financial activities, banking, securities, insurance, real estate business, metals and products made from pre-cast metal, mining products (excluding coal mining), coke, refined petroleum, chemical products. Details in Appendix 1 attached to this Decree. (Download Appendix 1)

[2] Products and services subject to special consumption tax. Details in Appendix 2 attached to this Decree. (Download Appendix 2)

[3] Information technology according to the law on information technology. Details in Appendix 3 attached to this Decree. (Download Appendix 3)

[4] The VAT reduction for each type of goods and services as stipulated in Clause 1, Article 1 of Decree 72/2024/ND-CP is uniformly applied across import, production, processing, and commercial trading stages.

For coal products sold out after mining (including cases where coal is sifted and classified through a closed process before being sold), these are subject to VAT reduction.

Coal products listed in Appendix 1 attached to this Decree (Download Appendix 1) at stages other than the mining and selling stage are not subject to VAT reduction.

Large corporations and economic groups carrying out a closed process before selling are also subject to VAT reduction for coal products sold after mining.

Goods and services listed in Appendices 1, 2, and 3 attached to this Decree that are non-subject to VAT or subject to a 5% VAT rate according to the Law on VAT will comply with the Law on VAT and are not subject to VAT reduction.

Accordingly, goods and services with a previous 10% VAT rate will be eligible for a 2% VAT reduction, except for the cases mentioned above.

Among these, perfumes and fragrances are products in the group of goods and services not eligible for VAT reduction (i.e., still subject to a 10% rate).

Therefore, according to the above regulations, the sale of perfumes will not be eligible for VAT reduction in 2024.

>>> See details List of goods and services not subject to VAT reduction rates attached to Decree 72/2024/ND-CP.

Is perfumes eligible for VAT reduction in Vietnam in 2024? (Image from the Internet)

What are the methods for VAT deduction in Vietnam?

Pursuant to Article 10 of the Law on VAT 2008 (amended by Clause 4, Article 1 of the Law Amending the Law on VAT 2013), the VAT deduction methods for the year 2024 are specified as follows:

- VAT deduction methods are specified as follows:

+ The VAT payable under the deduction method is the output VAT amount minus the deductible input VAT amount.

+ The output VAT amount is the total VAT of goods and services sold, as recorded on VAT invoices.

The VAT of goods and services sold, as recorded on VAT invoices, is the taxable price of the sold goods and services multiplied by the VAT rate applicable to those goods and services.

In cases where the payment price includes VAT, the output VAT amount is calculated as the payment price minus the VAT calculation price determined according to Point k, Clause 1, Article 7 of the Law on VAT 2008.

+ The deductible input VAT amount is the total VAT recorded on VAT invoices for purchased goods and services, and import VAT receipts that meet the conditions stipulated in Article 12 of the Law on VAT 2008 (amended by Clause 6, Article 1 of the Law Amending the Law on VAT 2013).

- The deduction method applies to businesses that comply with accounting policies, invoices, and documents per the law on accounting, invoices, and documents, including:

+ Businesses with annual revenue from sales of goods and services from one billion dong or more, except for households and individual businesses.

+ Businesses voluntarily registering to apply the deduction method, except for households and individual businesses.

When is the time for VAT calculation in Vietnam?

According to Article 8 of Circular 219/2013/TT-BTC, the VAT calculation time is guided specifically as follows:

- For the sale of goods, it is the time of transfer of ownership or right to use the goods to the buyer, regardless of whether the money has been collected or not.

- For service provisions, it is the time of completion of service provision or issuance of the service provision invoice, regardless of whether the money has been collected or not.

For telecommunications services, it is the time of completing the reconciliation of service charges in accordance with the economic contract between telecommunications service providers, but no later than 2 months from the month of incurring the service charges.

- For electricity and clean water supply activities, it is the day the consumption index readings on meters are recorded to issue invoices.

- For real estate business, infrastructure construction, house construction for sale, transfer or lease, it is the time of payment collection according to project progress or the payment schedule specified in the contract.

Based on the collected payment, the business declares the output VAT incurred during the period.

- For construction and installation, including shipbuilding, it is the time of acceptance and handover of the works, project items, or construction and installation volumes completed, regardless of whether the money has been collected or not.

- For imported goods, it is the time of customs declaration registration.