Shall a 8% or 10% value-added tax rate apply to the audio and lighting service providers for event organization in Vietnam?

Shall a 8% or 10% value-added tax rate apply to the audio and lighting service providers for event organization in Vietnam?

Firstly, based on Clause 3, Article 8 of the Value-Added Tax Law 2008 regarding the 10% value-added tax rate as follows:

Tax Rate

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3. The 10% tax rate applies to goods and services not specified in Clauses 1 and 2 of this Article.

The audio and lighting service provider for event organization does not fall under the conditions for applying the 0% and 5% tax rates as specified in Clauses 1 and 2, Article 8 of the Value-Added Tax Law 2008.

Moreover, the 10% value-added tax rate is specifically guided in Article 11 of Circular 219/2013/TT-BTC, which stipulates that the 10% tax rate applies to goods and services not subject to VAT, 0% VAT, or 5% VAT.

- The VAT rates stated in Articles 10 and 11 of Circular 219/2013/TT-BTC are uniformly applied to each type of goods and services in the stages of importation, production, processing or commercial business.

- Scrap, waste material recovered for recycling and reuse, when sold, apply the VAT rate according to the rate of the scrap, waste material sold.

- Business establishments with multiple types of goods and services subject to different VAT rates must declare VAT at each rate applicable to each type of goods and services; if the business establishment does not determine according to each tax rate, it must calculate and pay tax at the highest tax rate of the goods and services produced and traded by the establishment.

- During implementation, if there is a case where the VAT rate in the VAT Tariff according to the Preferential Import Tariff is not consistent with the guidance in this Circular, then follow the guidance of Circular 219/2013/TT-BTC.

*Note: In cases where the VAT rate does not match for the same type of imported and domestically produced goods, the local tax and customs authorities report to the Ministry of Finance for prompt guidance to ensure uniform implementation.

From July 1, 2024, as Decree 72/2024/ND-CP officially takes effect, the groups of goods and services currently applying the 10% tax rate will be reduced to 8%. However, this excludes the following groups of goods and services based on Clause 1, Article 1 of Decree 72/2024/ND-CP

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

[2] Goods and services subject to special consumption tax. Detailed in Appendix 2 issued with this Decree. (Download Appendix 2)

[3] Information technology according to information technology law. Detailed in Appendix 3 issued with this Decree. (Download Appendix 3)

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

For coal mined and sold (including cases where coal is mined, then screened and classified according to a closed process before being sold) is subject to VAT reduction.

Coal is listed in Appendix 1 issued with this Decree

(Download Appendix 1), not eligible for VAT reduction at stages other than mining and selling.

Corporations and economic groups operating a closed process before selling are also subject to VAT reduction on mined coal sold.

In cases where goods and services listed in Appendices 1, 2, and 3 issued with this Decree fall under non-taxable VAT or subject to 5% VAT according to the provisions of the Value-Added Tax Law, the implementation shall follow the provisions of the Value-Added Tax Law and shall not receive VAT reduction.

>>> In conclusion, according to the aforementioned regulations, it can be concluded that the audio and lighting service provider for event organization does not fall under the 0% and 5% VAT rate category.

Therefore, it means that the audio and lighting service provider for event organization will be subject to a 10% VAT rate.

However, as of July 1, 2024, when Decree 72/2024/ND-CP is officially effective, goods and services groups applying the 10% rate will be reduced to 8% (the business of leasing out audio and lighting services for event organization is eligible for the reduction).

Thus, the audio and lighting service provider for event organization applying the 10% tax rate will be reduced to 8%.

*Note: The 8% tax rate under Decree 72/2024/ND-CP is applicable from July 1, 2024, to December 31, 2024.

Shall a 8% or 10% value-added tax rate apply to the audio and lighting service providers for event organization in Vietnam? (Image from Internet)

Which groups of goods and services are not eligible for VAT reduction in Vietnam under Decree 72?

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

* VAT reduction for groups of goods and services applying a 10% tax rate, except for the following groups:

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

[2] Goods and services subject to special consumption tax. Detailed in Appendix 2 issued with this Decree. (Download Appendix 2)

[3] Information technology according to information technology law. Detailed in Appendix 3 issued with this Decree. (Download Appendix 3)

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

For coal mined and sold (including cases where coal is mined, then screened and classified according to a closed process before being sold) is subject to VAT reduction.

Coal is listed in Appendix 1 issued with this Decree

(Download Appendix 1), not eligible for VAT reduction at stages other than mining and selling.

Corporations and economic groups operating a closed process before selling are also subject to VAT reduction on mined coal sold.

In cases where goods and services listed in Appendices 1, 2, and 3 issued with this Decree fall under non-taxable VAT or subject to 5% VAT according to the provisions of the Value-Added Tax Law, the implementation shall follow the provisions of the Value-Added Tax Law and shall not receive VAT reduction.

What are the procedures for implementing the VAT reduction in Vietnam in 2024?

Based on Clause 3, Article 1 of Decree 72/2024/ND-CP, the procedure for implementing the VAT reduction is as follows:

* Procedure, Implementation

- For business establishments specified at point a, Clause 2, Article 1 of Decree 72/2024/ND-CP, when issuing value-added tax invoices for supplying goods and services subject to VAT reduction, the VAT line records “8%”; VAT amount; the total amount the buyer must pay.

Based on the value-added tax invoice, the selling business establishment declares output VAT, and the purchasing business establishment declares input VAT deduction according to the reduced tax stated on the VAT invoice.

- For business establishments specified at point b, Clause 2, Article 1 of Decree 72/2024/ND-CP, when issuing sales invoices for supplying goods and services subject to VAT reduction, the “Total amount” column must record the full price of goods and services before reduction, and at the line “Total goods and services amount,” record the reduced amount by 20% discount on the percentage basis on revenue, with a note: “has been reduced... (amount) corresponding to 20% percentage basis to calculate VAT according to Resolution No. 142/2024/QH15”.