Is there a Draft Resolution on VAT reduction in Vietnam for the first half of 2025?

Is there a Draft Resolution on VAT reduction in Vietnam for the first half of 2025?

Currently, the Ministry of Finance has completed the first Draft of the National Assembly’s Resolution on the continued reduction of VAT for the first half of 2025.

The Government of Vietnam has announced the National Assembly’s Resolution on reducing value-added tax as well as the proposal files for drafting the National Assembly’s Resolution on reducing value-added tax for the first half of 2025.

Draft Resolution on VAT Reduction for the First Half of 2025…Download

View the complete proposal files for drafting the National Assembly’s Resolution on reducing value-added tax…Download

The expected VAT reduction policy for 2025 will apply after Decree 72/2024/ND-CP expires.

Is there a Draft Resolution on VAT reduction in Vietnam for the first half of 2025? (Image from the internet)

What are regulations on the new draft on VAT reduction in Vietnam for the first half of 2025?

According to Article 1 of the Draft Resolution on VAT reduction from January 1, 2025, to June 30, 2025, as follows:

Scope of Application

1. A 2% reduction in the VAT rate is applied to goods and services currently subject to a 10% tax rate (reduced to 8%), except for certain groups of goods and services: telecommunications, information technology, financial activities, banking, securities, insurance, real estate business, metal production, and finished metal products, mining (excluding coal mining), coke production, refined petroleum, chemical production, and chemical products, excise-taxed goods, and services.

2. The period of application of the 2% VAT reduction is stipulated in clause 1 of this Article from January 1, 2025, to June 30, 2025.

Accordingly, the Ministry of Finance proposes a 2% reduction in the VAT rate, applying to goods and services currently charged at a 10% rate (reduced to 8%), excluding certain goods and services such as telecommunications, information technology, finance, banking, securities, insurance, real estate, metals, finished metal products, mining (excluding coal mining), coke products, refined petroleum, chemical products, and excise-taxed goods and services.

The application period is from January 1, 2025, to June 30, 2025.

What are regulations under Decree 72 regarding VAT reduction in Vietnam?

Based on Article 1 of Decree 72/2024/ND-CP prescribing VAT reduction until the end of 2024 as follows:

(1) Reduction of VAT for goods and services currently applying a 10% tax rate, except for the following goods and services:

- Telecommunications, financial activities, banking, securities, insurance, real estate business, metal production, finished metal products, mining (excluding coal mining), coke, refined petroleum, chemical products.

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

- Excise-taxed goods and services.

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

- Information technology as per the law on information technology.

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

- Reduction of VAT for each type of goods and services specified in (1) is applied uniformly at import, production, processing, and commercial stages. Coal extraction items sold (including cases where coal is extracted and then screened, classified in a closed process) are subject to VAT reduction. Other stages besides the extraction and sale stages are not eligible for VAT reduction.

Corporations and economic groups implementing closed processes before selling are also subject to VAT reduction for coal extraction items sold.

Goods and services mentioned in Appendices 1, 2, and 3 issued with Decree 72/2024/ND-CP that fall under the category of non-VAT or 5% VAT under the Law on VAT must follow the Law on VAT and are not eligible for VAT reduction.

(2) VAT Reduction Rate:

- Business establishments calculating VAT by credit method apply an 8% VAT rate for goods and services as defined in clause 1 of Article 1 Decree 72/2024/ND-CP.

- Business establishments (including business households and individuals) calculating VAT by percentage method on revenue get a 20% reduction in the percentage used for VAT billing for goods and services reduced as per clause 1 Article 1 Decree 72/2024/ND-CP.

(3) Procedures

- For business establishments outlined at point a clause 2 Article 1 Decree 72/2024/ND-CP, when issuing VAT invoices for goods and services eligible for VAT reduction, indicate the line for VAT rate with “8%”; VAT; total amount payable by the buyer.

Based on the VAT invoice, businesses selling goods and services declare output VAT; businesses purchasing goods and services declare input VAT deduction on the reduced tax indicated on the VAT invoice.

- For business establishments outlined at point b clause 2 Article 1 Decree 72/2024/ND-CP, when issuing sales invoices for goods and services eligible for VAT reduction, the “Total amount in words” column should reflect the total goods and services amount before the reduction, while the “Total goods and services value” should reflect a 20% reduced percentage on revenue; additionally, a note should indicate “reduced by... (amount) equivalent to a 20% rate to calculate VAT according to Resolution 142/2024/QH15”.

(4) For business establishments as per point a clause 2 Article 1 Decree 72/2024/ND-CP selling goods, providing services that apply different VAT rates, the VAT invoice must clearly state the tax rates per the guidance in (3).

For business establishments as per point b clause 2 Article 1 Decree 72/2024/ND-CP selling goods, providing services, the sales invoice must clearly state the reduced amount as regulated in clause 3 Article 1 Decree 72/2024/ND-CP.

(5) If a business establishment has issued invoices and declared according to unreduced VAT rates or percentages specified in Decree 72/2024/ND-CP, seller and buyer shall handle the issued invoice in accordance with legal regulations on invoices and documents.

Based on the post-handling invoice, the seller shall declare and adjust output VAT, and the buyer shall declare and adjust input VAT (if applicable).

(6) Business establishments specified in this Article shall declare goods and services eligible for VAT reduction according to Form No. 01 in Appendix 4 issued with Decree 72/2024/ND-CP along with VAT returns.