Is the Appendix of Decree 72 on VAT reduction valid until the end of 2024 in Vietnam?

Is the Appendix of Decree 72 on VAT reduction valid until the end of 2024 in Vietnam?

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.

According to Article 1 of Decree 72/2024/ND-CP, value-added tax is reduced for groups of goods and services currently applying the 10% tax rate, excluding 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 products, chemical products.

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

- Goods products and services subject to special consumption tax.

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

- Information technology as per the law on information technology.

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

Additionally, the reduction of value-added tax for each type of goods and services stipulated in Clause 1, Article 1 of Decree 72/2024/ND-CP is uniformly applied in importation, production, processing, and commercial business phases. For the case of extracted coal sold (including coal that has been screened and classified through a closed process before selling), it is subject to a reduction of the value-added tax. Coal items listed in Appendix 1 issued with Decree 72/2024/ND-CP, outside the extraction sale phase, are not eligible for the value-added tax reduction.

Corporations and economic groups that implement a closed process before selling also fall under the subject of value-added tax reduction for extracted coal sold.

If the goods and services listed in Appendices 1, 2, and 3 issued with Decree 72/2024/ND-CP fall under the category of not subject to value-added tax or subject to value-added tax of 5% as per the Value-Added Tax Law, they will follow the Value-Added Tax Law regulations and will not be eligible for a value-added tax reduction.

>> Download the Appendix of Decree 72 on VAT Reduction until the end of 2024 here

Is the Appendix of Decree 72 on VAT reduction valid until the end of 2024 in Vietnam? (Image from the Internet)

What is the rate of value-added tax reduction in Vietnam?

Based on Clause 2, Article 1 of Decree 72/2024/ND-CP, the rate of VAT reduction is defined as follows:

Value-Added Tax Reduction

...

2. Rate of Value-Added Tax Reduction

a) Business establishments calculating value-added tax by the deduction method are allowed to apply the 8% VAT rate for goods and services stipulated in Clause 1 of this Article.

b) Business establishments (including business households, individual businesses) calculating value-added tax as a percentage of revenue are allowed to reduce 20% of the percentage rate for calculating value-added tax when issuing invoices for goods and services eligible for VAT reduction stipulated in Clause 1 of this Article.

The VAT rate is reduced by 2% applicable to business establishments of goods and services listed in Clause 1, Article 1 of Decree 72/2024/ND-CP, which calculate value-added tax by the deduction method.

For business establishments (including business households, individual businesses) that calculate value-added tax as a percentage of revenue, a 20% reduction in the percentage rate for calculating value-added tax will be applied when issuing invoices for goods and services eligible for VAT reduction stipulated in Clause 1, Article 1 of Decree 72/2024/ND-CP.

What is the period for VAT reduction as per Decree 72 in Vietnam?

According to the provisions of Clause 1, Article 2 of Decree 72/2024/ND-CP:

Validity and Implementation

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

2. Ministries, based on their functions and duties, and provincial/municipal People's Committees shall direct relevant agencies to implement propagation, guidance, inspection, and supervision so that consumers understand and benefit from the value-added tax reduction stipulated in Article 1 of this Decree, focusing on solutions to stabilize supply and demand of goods and services subject to value-added tax reduction to maintain market price stability (pre-tax value-added) from July 1, 2024, until the end of December 31, 2024.

3. In case of any arising issues during implementation, the Ministry of Finance shall give guidance and resolve.

4. Ministers, Heads of ministerial-level agencies, Heads of Government-attached agencies, Chairpersons of provincial/municipal People's Committees, and related enterprises, organizations, and individuals are responsible for implementing this Decree.

Decree 72/2024/ND-CP is effective from July 1, 2024, until the end of December 31, 2024.

This also means that the regulation to reduce VAT to 8% will only apply until the end of December 31, 2024.

From January 1, 2025, the VAT rate for the goods and services that were reduced will return to 10% (unless otherwise specified by another directive).