Shall 8% VAT rate continue to apply during the first 6 months of in 2025 according to Resolution 218?

Shall 8% VAT rate continue to apply during the first 6 months of in 2025 according to Resolution 218?

According to Resolution 218/NQ-CP dated November 12, 2024, the Government of Vietnam assigns the Ministry of Finance to lead, in cooperation with various agencies and localities, to research, advise, and propose the formulation of a National Strategy on Preventing and Combating Waste according to the directive spirit of the General Secretary, to report to the Prime Minister of the Government of Vietnam in November 2024.

See the detailed file of Resolution 218/NQ-CP dated November 12, 2024: Here

Simultaneously, the Ministry of Finance is instructed to promptly summarize, assess, and advise, proposing to issue under its jurisdiction or submit to competent authorities policies on exemption, reduction, tax extension, fees, land levies in 2025 to enable implementation from the beginning of the year, especially the continuation of the VAT reduction for the first six months of 2025 to report to the National Assembly at the 8th Session.

Thus, the continuation of the VAT reduction for the first six months of 2025 will be reported at the 8th Session. Currently, there is still no official document regarding the continuation of the VAT 2025 reduction to 8% for the first six months of 2025.

Shall 8% VAT rate continue to apply during the first 6 months of in 2025 according to Resolution 218? (Image from Internet)

What are the conditions for 8% VAT rate according to Decree 72/2024?

For goods and services to be eligible for the tax reduction policy under Decree 72/2024/ND-CP, they must concurrently meet all three of the following conditions:

First, the goods or services must currently be subject to a 10% tax rate

According to clause 1, Article 1 of Decree 72/2024/ND-CP:

1. Reduce VAT for groups of goods and services that are currently subject to a 10% tax rate

Therefore, goods and services falling under the following categories will not receive VAT reductions (they will continue to apply the tax rate according to the Law on Value Added Tax):

+ Not subject to VAT

+ Not required to declare and pay VAT

+ Subject to a 0% VAT

+ Subject to a 5% VAT

Second, the group of goods or services must not fall under any of Appendix I, II, III of Decree 72/2024/ND-CP

This means they must not belong to the following goods and services groups:

+ Telecommunications, financial activities, banking, securities, insurance, real estate business, metals and manufactured metal products, mineral products (excluding coal mining), coke, refined petroleum, chemical products.

Details are provided in Appendix I issued alongside Decree 72/2024/ND-CP.

+ Goods and services subject to special consumption taxes.

Details can be found in Appendix II issued alongside Decree 72/2024/ND-CP.

+ Information technology under the law on information technology.

Details are provided in Appendix III issued alongside Decree 72/2024/ND-CP.

Third, enterprises selling goods and services within the period from July 01, 2024, to December 31, 2024

Since Decree 72/2024/ND-CP is effective from July 01, 2024, to December 31, 2024.

This also means:

+/ Enterprises selling goods and services within the period from July 01, 2024, to December 31, 2024, must determine the tax reduction level as stipulated in Decree 72/2024/ND-CP.

+/ Enterprises selling goods and services after this period will not be eligible for the VAT reduction policy stipulated in Decree 72/2024/ND-CP (i.e., from January 01, 2025, onwards will no longer be applicable for VAT reduction according to Decree 72/2024/ND-CP).

+ Prior to July 01, 2024, you can refer to the VAT reduction policy according to Decree 94/2023/ND-CP.

What are appendices of Decree 72 on VAT reduction 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.

As stated in Article 1 of Decree 72/2024/ND-CP: VAT is reduced for groups of goods and services currently subject to a 10% tax rate, excluding the following groups:

- Telecommunications, financial activities, banking, securities, insurance, real estate business, metals and manufactured metal products, mineral products (excluding coal mining), coke, refined oil, chemical products.

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

- Goods and services subject to special consumption taxes.

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

- Information technology according to the law on information technology.

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

Additionally, reducing value added tax for each type of goods and services as specified in clause 1, Article 1 of Decree 72/2024/ND-CP is uniformly applied at the stages of import, production, processing, and commercial business. For coal mining products sold (including cases where coal is mined, then screened and categorized in a closed process before being sold), which falls under the objects eligible for VAT reduction. Coal products are specified in Appendix 1 issued alongside Decree 72/2024/ND-CP, not eligible for VAT reduction outside the extraction phase.

Corporations and economic groups that conduct a closed process before sales also qualify for VAT reduction for coal mining products sold.

In cases where goods and services listed in Appendices 1, 2, and 3 issued alongside Decree 72/2024/ND-CP fall under categories not subject to VAT or are subject to a 5% VAT as per the Law on Value Added Tax, they shall comply with the Law on Value Added Tax and are not eligible for VAT reduction.

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