Shall the Decree on 20% reduction in VAT rate for the first 6 months of the year be issued in Vietnam before December 15, 2024?

Shall the Decree on 20% reduction in VAT rate for the first 6 months of the year be issued in Vietnam before December 15, 2024?

Based on sub-section 3.3, section 3 of Resolution 233/NQ-CP of 2024 concerning the regular Government meeting of November 2024 as follows:

Continue prioritizing the promotion of growth associated with maintaining macroeconomic stability, controlling inflation, ensuring major economic balances, with the determination to achieve the 2024 socio-economic development plan at the highest level, setting the momentum for acceleration and breakthroughs, striving to achieve the growth target of 8% in 2025.

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(3) Proactively grasp market situation, balance supply and demand, commodity prices, to have suitable and effective measures for market stabilization, especially for essential goods, ensuring supply for the end of the year and Tet holiday of Ất Ty 2025, avoiding shortages, disruptions, and sudden price increases.

(b) Ministry of Finance leads and cooperates with related agencies and localities:

(1) Strengthen financial discipline and state budget discipline; vigorously implement digital transformation and electronic invoices; intensify revenue collection related to land in the final months of 2024 as directed by the Prime Minister in Official Telegram 124/CD-TTg dated November 30, 2024.

(2) Promptly finalize and submit to the Government for issuing a Decree stipulating the policy of reducing value-added tax for the first 6 months of 2025 according to the Resolution of the 8th session of the National Assembly of the XV legislature, to be completed before December 15, 2024. Continue to study and propose competent authorities on exemption, reduction, extension policies of taxes, fees, and land rent, to support individuals and enterprises in developing production and business to apply right from early 2025 based on a thorough evaluation to build policies with foresight and ambition.

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Thus, according to the above Resolution, the Government requires the Ministry of Finance to lead and collaborate with related agencies and localities to promptly finalize and submit to the Government the issuance of a Decree stipulating the policy of reducing value-added tax for the first 6 months of 2025 according to the Resolution of the 8th session of the National Assembly of the XV legislature, to be completed before December 15, 2024.

This means the Decree on a 20% reduction in VAT rate for the first 6 months of 2025 is expected to be issued before December 15, 2024.

Shall the Decree on 20% reduction in VAT rate for the first 6 months of the year be issued in Vietnam before December 15, 2024? (Image from the Internet)

Which goods are subject to a 20% reduction in VAT rate in Vietnam in the first 6 months of 2025?

Based on section 8 of Resolution 174/2024/QH15, the goods eligible for a 20% reduction in VAT rate are the groups of goods and services stipulated at point a, section 1.1, clause 1, Article 3 of Resolution 43/2022/QH15 of the National Assembly on fiscal and monetary policy supporting the economic recovery and development program from January 1, 2025, to the end of June 30, 2025.

Download Resolution 174/2024/QH15

Simultaneously, point a, section 1.1, clause 1, Article 3 of Resolution 43/2022/QH15 stipulates as follows:

Policy to support the economic recovery and development program

1. Fiscal policy:

1.1. Tax exemption and reduction policy:

a) Reduce 2% of the value-added tax rate in 2022, applicable to groups of goods and services currently applying a 10% VAT rate (to 8%), except for certain groups of goods and services such as: telecommunications, information technology, financial activities, banking, securities, insurance, real estate business, metals, fabricated metal products, mining products (excluding coal mining), coke, refined petroleum, chemical products, goods and services subject to special consumption tax;

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Thus, the goods eligible for a 20% reduction in VAT rate from January 1, 2025, to June 30, 2025, are the groups of goods and services currently applying a 10% VAT rate (to 8%), with the exception of certain groups of goods and services such as:

- Telecommunications, information technology, financial activities, banking, securities, insurance, real estate business, metals, fabricated metal products, mining products (excluding coal mining), coke, refined petroleum, chemical products, goods, and services subject to special consumption tax.

At the same time, the Ministry of Finance is also soliciting opinions to finalize the Decree on a 20% reduction in VAT rate for the first 6 months of 2025. Currently, the latest draft Decree for the 2025 first-half VAT reduction updated by the Ministry of Finance is the draft number 3.

Download Draft Decree on 20% reduction in VAT rate (Draft number 3)

The content of the Draft Decree on 20% reduction in VAT rate for the first half of 2025 is based on the full inheritance of contents already stipulated in Decree 72/2024/ND-CP.

What are the exemption cases of VAT declaration and payment in Vietnam?

According to clause 3, Article 3 of Decree 209/2013/ND-CP stipulating cases not required to declare or pay value-added tax as follows:

- Organizations and individuals that receive financial compensation, bonuses, support funds, transfer fees of emission rights, and other financial receipts.

- Organizations and individuals that produce and do business in Vietnam purchasing services from foreign organizations without a permanent establishment in Vietnam, individuals overseas who are non-residents of Vietnam, including cases such as vehicle and machinery repair (including materials, replacement parts); advertising, marketing; investment and trade promotion; sales agency and service provision; training; sharing postal and telecommunications international service charges between Vietnam and abroad where these services are performed outside of Vietnam.

- Organizations and individuals not engaged in business and not subject to VAT selling assets.

- Organizations and individuals transferring investment projects for the production and business of goods and services subject to VAT to enterprises, cooperatives.

- Products from agricultural, livestock, and aquatic activities that have not been processed or only undergone simple processing sold to enterprises and cooperatives, except for cases stipulated in Clause 1, Article 5 of the Vietnamese VAT Law 2008.