Is there a VAT reduction for hard coal and lignite mining in Vietnam from 2024?

Is there a VAT reduction for hard coal and lignite mining in Vietnam from 2024?

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

* VAT reduction for goods and services currently subject to 10% VAT, excluding the following groups of goods and services:

[1] Telecommunications, financial activities, banking, securities, insurance, real estate business, metals and fabricated metal products, mining products (except coal mining), coke, refined petroleum, chemical products. Details are in Appendix 1 issued with this Decree. (Download Appendix 1)

[2] Products and special consumption taxable services. Details are in Appendix 2 issued with this Decree. (Download Appendix 2)

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

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

For exported mined coal (including the case where coal is mined, then screened, classified through a closed process before selling), it is eligible for VAT reduction.

Coal products listed in Appendix 1 issued with this Decree (Download Appendix 1), at stages other than mining for sale, are not eligible for VAT reduction.

Economic corporations, groups implementing a closed process before selling, are also subject to VAT reduction for mined coal products for sale.

For goods and services listed in Appendices 1, 2, and 3 issued with this Decree which are subject to zero VAT or 5% VAT according to the VAT Law, shall comply with the VAT Law provisions and are not eligible for VAT reduction.

The regulations state that VAT reduction will not apply to mined coal products for sale. This includes coal mined, then screened, classified through a closed process before selling, and is eligible for VAT reduction.

Coal products listed in Appendix 1 issued with this Decree (Download Appendix 1), at stages other than mining for sale, are not eligible for VAT reduction.

Economic corporations, groups implementing a closed process before selling, are also subject to VAT reduction for mined coal products for sale.

Moreover, hard coal and lignite listed in Appendix 1 issued with Decree 72/2024/ND-CP (Download Appendix 1) are not eligible for VAT reduction.

Therefore, from the effective date of Decree 72/2024/ND-CP (i.e., July 1, 2024), hard coal and lignite mining will not be eligible for VAT reduction.

Is there a VAT reduction for hard coal and lignite mining in Vietnam from 2024? (Image from Internet)

When is the time for calculating VAT in Vietnam?

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

- For goods sales, it is the time of transfer of ownership or rights to use the goods to the buyer, regardless of whether the money has been received or not.

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

For telecommunication services, it is the time of completing the data reconciliation of telecommunications service charges according to economic contracts between telecommunications service businesses but no later than 2 months from the month of incurring telecommunications service charges.

- For electricity and clean water supply activities, it is the date of recording the electricity or water consumption index on the meter to be noted on the payment invoice.

- For real estate business, infrastructure construction, construction of houses for sale, transfer, or lease, it is the time of money collection according to the project implementation progress or the money collection progress recorded in the contract.

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

- For construction and installation, including shipbuilding, it is the time of acceptance and handover of the project, project item, or completed construction and installation workload, regardless of whether the money has been received or not.

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

What are VAT deduction methods in Vietnam in 2024?

Based on Article 10 of the Law on Value-Added Tax 2008 (amended by Clause 4, Article 1 of the Law on Value-Added Tax Amendment 2013), the VAT deduction method in 2024 is regulated as follows:

- The VAT deduction method is regulated as follows:

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

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

The VAT of goods and services sold as recorded on the VAT invoice equals the taxable price of the goods or services sold multiplied by the VAT rate of those goods or services.

In case of using documents recording the payment price including VAT, the output VAT is determined by the payment price minus the VAT taxable price determined according to point k, clause 1, Article 7 of the Law on Value-Added Tax 2008.

+ The deductible input VAT is the total VAT recorded on VAT invoices for goods and services purchased, VAT payment documents for imported goods, and meeting the conditions specified in Article 12 of the Law on Value-Added Tax 2008 (amended by Clause 6, Article 1 of the Law on Value-Added Tax Amendment 2013).

- The deduction method applies to business establishments that fully implement accounting policies, invoices, and documents as regulated by the law on accounting, invoices, and documents, including:

+ Business establishments with an annual revenue from selling goods and providing services from one billion VND or more, excluding households and individuals doing business.

+ Business establishments registered voluntarily to apply the deduction method, excluding households and individuals doing business.