Is there a official 8% VAT reduction in Vietnam until June 30, 2025, according to Official Telegram 08?

Is there a official 8% VAT reduction in Vietnam until June 30, 2025, according to Official Telegram 08?

Recently, on December 31, 2024, the General Department of Taxation issued Official Telegram 08/CD-TCT Download, instructing the Tax Departments of provinces, centrally governed cities, and various Departments and Units under the General Department of Taxation to actively disseminate the Decree 180/2024/ND-CP of the Government of Vietnam on reducing the percentage of value-added tax (VAT) to 8%, which will be effective from January 1, 2025.

In Official Telegram 08/CD-TCT, several key issues are mentioned:

On November 30, 2024, the National Assembly issued Resolution 174/2024/QH15 during its 8th session, 15th legislature, which in Section 8 states:

Continue to reduce the VAT rate by 2% for goods and service groups specified in point a, item 1.1, Section 1, Article 3 of Resolution 43/2022/QH15 of the National Assembly on fiscal and monetary policies to support the Economic and Social Recovery and Development Program, effective from January 1, 2025, to June 30, 2025. The Government of Vietnam is tasked with organizing and ensuring the revenue and budget balance for 2025 as decided by the National Assembly.

On December 31, 2024, the Government of Vietnam issued Decree 180/2024/ND-CP, which outlines the VAT reduction policy by 2% in accordance with Resolution 174/2024/QH15 of the National Assembly.

Decree 180/2024/ND-CP prescribes the reduction of VAT from January 1, 2025, to June 30, 2025, applicable to goods and service groups currently subject to the 10% VAT rate, excluding certain goods and services.

The General Department of Taxation requires Tax Departments to actively disseminate the 2% VAT reduction policy to taxpayers to promptly implement Decree 180/2024/ND-CP.

See more in Official Telegram 08/CD-TCT...Download

Is there a official 8% VAT reduction in Vietnam until June 30, 2025, according to Official Telegram 08? (Image from the Internet)

What goods and services are eligible for the 8% VAT reduction in Vietnam?

According to Clause 1, Article 1 of Decree 180/2024/ND-CP, the beneficiaries of the VAT reduction are defined as follows:

- VAT reduction applies to goods and service groups currently subject to the 10% VAT rate, excluding the following groups:

+ Telecommunications, financial activities, banking, securities, insurance, real estate business, metals and fabricated metal products, mining products (excluding coal mining), coke, refined petroleum, and chemical products. Details in Appendix 1 issued with Decree 180/2024/ND-CP.

+ Goods and services subject to special consumption tax. Details in Appendix 2 issued with Decree 180/2024/ND-CP.

+ Information technology products in accordance with IT laws. Details in Appendix 3 issued with Decree 180/2024/ND-CP.

+ The VAT reduction for each type of goods and services specified in Clause 1, Article 1 of Decree 180/2024/ND-CP is uniformly applied at the stages of importation, production, processing, and commercial business. For mined coal sold (including cases where mined coal is sorted and categorized in a closed process before being sold), it is subject to the VAT reduction. Coal products listed in Appendix 1 issued with Decree 180/2024/ND-CP are not eligible for the VAT reduction at stages other than sale after mining.

- Economic corporations and general companies conducting a closed process for later sale are also eligible for VAT reduction on mined coal sold.

- In case goods and services mentioned in Appendices 1, 2, and 3 issued with Decree 180/2024/ND-CP are subject to zero VAT or 5% VAT according to the Law on VAT, they shall be implemented in accordance with the Law on VAT and will not be eligible for VAT reduction.

Which entities are the VAT taxpayers in Vietnam?

According to Article 3 of Circular 219/2013/TT-BTC, VAT taxpayers are organizations and individuals producing and trading goods and services subject to VAT in Vietnam, regardless of industry, form, or business organization (hereinafter referred to as business establishments) and organizations and individuals importing goods, purchasing services from abroad subject to VAT (hereinafter referred to as importers) including:

- Business organizations established and registered under the Enterprise Law 2020, Cooperative Law 2023, and other relevant business laws;

- Economic organizations belonging to political organizations, socio-political organizations, social organizations, professional social organizations, people's armed units, non-business organizations, and other organizations;

- Foreign-invested enterprises and foreign parties participating in business cooperation under the Investment Law; foreign organizations and individuals operating business in Vietnam but not establishing legal entities in Vietnam;

- Individuals, households, independent business groups, and other entities engaged in production, business, and import activities;

- Organizations and individuals producing or doing business in Vietnam purchasing services (including purchasing services associated with goods) from foreign organizations not having a permanent establishment in Vietnam or individuals residing overseas who are non-residents in Vietnam, shall be the taxpayers, except for cases where VAT declaration and payment are exempted as guided at Clause 2, Article 5 of Circular 219/2013/TT-BTC.

Regulations on permanent establishments and non-resident entities are implemented according to the laws on corporate income tax and personal income tax.

- Branches of export processing enterprises established for trading goods and activities directly related to the sale of goods in Vietnam as prescribed by the laws on industrial zones, export processing zones, and economic zones.