Is there a reduction in value-added tax for trading in tobacco products in Vietnam?

Is there a reduction in value-added tax for trading in tobacco products in Vietnam?

Pursuant to Clause 1, Article 1 of Decree 72/2024/ND-CP regulating the reduction of value-added tax on groups of goods and services currently subject to the 10% tax rate, except for the following groups of goods and services:

- 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 are outlined in Appendix 1 attached to Decree 72/2024/ND-CP. Download

- Goods and services subject to excise tax. Details are outlined in Appendix 2 attached to Decree 72/2024/ND-CP. Download

- Information technology as per the law on information technology. Details are outlined in Appendix 3 attached to Decree 72/2024/ND-CP. Download

- The reduction of value-added tax for each type of goods and services as stipulated in Clause 1 of this Article is uniformly applied at import, production, processing, and commercial business stages. Coal mining goods for sale (including cases where mined coal is subsequently screened, classified according to a closed process before sale) are subject to value-added tax reduction. Coal items listed in Appendix I attached to Decree 72/2024/ND-CP at stages other than mining and sales are not eligible for value-added tax reduction.

- Large corporations and economic groups implementing closed processes before sale are also eligible for value-added tax reduction for coal mining sale items.

Note: In the case of goods and services listed in Appendices I, II, and III attached to Decree 72/2024/ND-CP that are not subject to or are subject to a 5% value-added tax according to the Value-Added Tax Law, then follow the regulations of the Value-Added Tax Law and are not eligible for value-added tax reduction.

Thus, according to Appendix 2 attached to Decree 72/2024/ND-CP, trading in tobacco products do not receive tax reduction.

Is there a reduction in value-added tax for trading in tobacco products in Vietnam? (Internet Image)

What are procedures for value-added tax reduction in Vietnam?

Pursuant to Clause 3, Article 1 of Decree 72/2024/ND-CP regulating the procedure for implementing value-added tax reduction specifically as follows:

- For business establishments calculating value-added tax by the deduction method, when issuing a value-added tax invoice providing goods and services subject to reduced value-added tax, at the tax rate line write "8%"; value-added tax; total amount payable by the buyer. Based on the value-added tax invoice, the business establishment selling goods and services declares the output value-added tax, and the purchasing business establishment declares the deduction of input value-added tax according to the reduced tax amount stated on the value-added tax invoice.

- For business establishments calculating value-added tax by the percentage method on revenue, when issuing a sales invoice providing goods and services subject to reduced value-added tax, at the "Total amount" column fill in the full amount of goods and services before reduction, at the "Total amount of goods and services" line fill in the amount reduced by 20% of the percentage on revenue, with a note: "reduced by… (amount) corresponding to a 20% percentage to calculate value-added tax according to Resolution No. 142/2024/QH15".

Additionally, Decree 72/2024/ND-CP also states clearly: In case the business establishment calculates value-added tax by the deduction method when selling goods and providing services applying different tax rates, the value-added tax invoice must clearly state the tax rate for each goods and service as per regulations.

In case the business establishment calculates value-added tax by the percentage method on revenue, when selling goods and providing services, the sales invoice must clearly state the amount reduced as per regulations.

In case the business establishment has issued invoices and declared according to tax rates or percentage rates to calculate value-added tax that have not been reduced as per the regulations in this Decree, the seller and the buyer shall handle the issued invoice according to the law on invoices and documents. Based on the processed invoice, the seller declares output tax adjustments, and the buyer declares input tax adjustments (if any).

Note: Decree 72/2024/ND-CP is effective from July 1, 2024, to December 31, 2024.

What are the value-added tax reduction rates in Vietnam according to Decree 72/2024/ND-CP?

Pursuant to Clause 3, Article 1 of Decree 72/2024/ND-CP stipulating the specific level of value-added tax reduction as follows:

Business establishments calculating value-added tax by the deduction method are applied a value-added tax rate of 8% for goods and services receiving value-added tax reduction.

Business establishments (including business households and individuals) calculating value-added tax by the percentage method on revenue are reduced by 20% of the percentage rate to calculate value-added tax when issuing invoices for goods and services receiving value-added tax reduction.