Shall the VAT reduction apply to all stages for goods and services entitled to tax reduction in Vietnam?
Shall the VAT reduction apply to all stages for goods and services entitled to tax reduction in Vietnam?
Pursuant to Clause 1, Article 1 of Decree 180/2024/ND-CP regarding VAT reduction as follows:
Reduction of VAT
- Reduction of VAT for goods and service groups currently applying a tax rate of 10%, except the following groups of goods and services:
a) Telecommunications, financial activities, banking, securities, insurance, real estate business, metals and fabricated metal products, mineral products (excluding coal mining), coke, refined petroleum products, and chemical products. Details in Appendix I issued with this Decree.
b) Goods and services subject to special consumption tax. Details in Appendix II issued with this Decree.
c) Information technology according to the laws on information technology. Details in Appendix III issued with this Decree.
d) The reduction of VAT for each type of goods and services specified in Clause 1 of this Article shall be uniformly applied at all stages of import, production, processing, and commercial business. The coal sold after extraction (including the case where coal is sold after closed-circuit processing and classification) is subject to VAT reduction. Coal, as specified in Appendix I issued with this Decree, at stages other than sale post-extraction, is not entitled to VAT reduction.
...
Simultaneously, according to the regulations in Appendix 1 issued with Decree 180/2024/ND-CP, regarding the list of goods and services not eligible for VAT reduction.
Thus, the VAT shall be reduced at all stages from import, production, processing to commercial business for goods and services subject to VAT reduction.
Except for cases involving coal as outlined in Appendix 1 issued with Decree 180/2024/ND-CP, which will only be subject to VAT reduction at the extraction sale stage, specifically including:
- Hard coal and lignite
- Hard coal:
+ Lump coal and anthracite, whether or not pulverized, but not agglomerated.
+ Agglomerated hard coal products in sector 19200.
- Anthracite coal:
+ Unconglomerated bituminous coal.
+ Volatile matter limit (in a dry, mineral-free base) does not exceed 14%.
- Bituminous coal: Coking coal, whose volatile matter limit (in a dry, mineral-free base) exceeds 14% and calorific value limit is from 5833 kcal/kg and above (in a moist, mineral-free base).
- Other types of hard coal
- Lignite:
+ Lignite, also known as brown coal, whether or not pulverized and not agglomerated.
+ Agglomerated lignite products in sector 19200.
Shall the VAT reduction apply to all stages for goods and services entitled to tax reduction in Vietnam? (Image from Internet)
What is the VAT redution rate in Vietnam?
Pursuant to Clause 2, Article 1 of Decree 180/2024/ND-CP regarding the VAT redution rate in the first 6 months of 2025 as follows:
- Business establishments calculating VAT by the deduction method shall apply an 8% VAT rate to goods and services specified in Clause 1, Article 1 of Decree 180/2024/ND-CP.
- Business establishments (including business households and individual business persons) using the percentage of revenue method will receive a 20% reduction in the percentage used to calculate VAT when issuing invoices for goods and services eligible for VAT reduction as stipulated in Clause 1, Article 1 of Decree 180/2024/ND-CP.
What is the current regulation on VAT payers in Vietnam?
According to Article 3 of Circular 219/2013/TT-BTC, VAT payers are organizations and individuals producing and trading goods and services subject to VAT in Vietnam, regardless of business sector, form, or type of business organization (hereafter referred to as business establishments) and organizations, individuals importing goods, purchasing services from abroad liable to VAT (hereafter referred to as importers), including:
- Business organizations established and registered according to the Law on Enterprises 2020, Law on Cooperatives 2023 and other specialized business laws;
- Economic organizations of political organizations, socio-political organizations, social organizations, socio-professional organizations, armed forces units, career organizations, and other organizations;
- Foreign-invested enterprises and foreign parties participating in business cooperation under the Law on Investment; foreign organizations and individuals doing business in Vietnam but not established as legal entities in Vietnam;
- Individuals, households, independent business groups, and other entities engaged in production, business, and import activities;
- Organizations and individuals engaged in production and business in Vietnam purchasing services (including in cases where services are associated with goods) from foreign organizations without permanent establishments in Vietnam, and individuals outside Vietnam who are considered non-residents in Vietnam, then the organization and individual purchasing the service are the taxpayers, except for cases not required to declare, calculate, and pay VAT as stipulated in Clause 2, Article 5 of Circular 219/2013/TT-BTC.
Regulations on permanent establishments and non-resident entities are implemented according to the law on corporate income tax and personal income tax.
- Branches of export processing enterprises established to engage in the trading of goods and activities directly related to the trading of goods in Vietnam following the provisions of the law on industrial parks, export processing zones, and economic zones.
