Vietnam: Difference in VAT rates for goods and services sold and purchased during the period with 8% VAT rate on the VAT declaration appendix according to Resolution 142

Vietnam: Difference in VAT rates for goods and services sold and purchased during the period with 8% VAT rate on the VAT declaration appendix according to Resolution 142

Based on the appendix for the 2% VAT reduction according to Resolution 142/2024/QH15 that has been updated on the HTKK 5.2.3 version.

Simultaneously, according to the implementation process for VAT reduction as prescribed in Decree 72/2024/ND-CP, guidance is as follows:

- For business establishments calculating VAT by the credit method, the 8% VAT rate is applicable. When issuing VAT invoices for providing goods and services subject to VAT reduction, indicate "8%" at the VAT rate line; VAT amount; and total amount payable by the buyer.

Based on the VAT invoice, business establishments selling goods and services declare output VAT, and business establishments purchasing goods and services declare input VAT credit according to the reduced tax recorded on the VAT invoices.

In Section III of the appendix for the 2% VAT reduction according to Resolution 142/2024/QH15 on the HTKK 5.2.2 software, after the taxpayer declares goods purchased and sold in the period applying the 8% VAT, the VAT discrepancy for goods and services sold and purchased in the period applying the 8% VAT is calculated as follows: VAT of goods and services sold during the period reduced - VAT of goods and services purchased creditable during the period (the HTKK software will automatically calculate the tax difference).

Vietnam: Difference in VAT rates for goods and services sold and purchased during the period with 8% VAT rate on the VAT declaration appendix according to Resolution 142 (Image from the Internet)

Guidance on declaring the VAT reduction appendix in Vietnam according to Resolution 142/2024/QH15 on HTKK 5.2.3 software

The VAT reduction appendix according to Resolution 142/2024/QH15 on the HTKK software version 5.2.3 consists of three sections:

Section 1: For goods or services purchased applying an 8% tax rate (applicable to taxpayers declaring by the credit tax method):

Name of goods, services (2): Enter the name of goods, services purchased during the period applying an 8% VAT rate.

Value of goods, services purchased not including creditable VAT during the period (3): Enter the value of goods, services bought excluding VAT creditable during the period.

VAT of goods, services purchased creditable during the period (4): After entering the reduced tax goods/services name and pre-tax price in columns (2) and (3), the HTKK software will automatically calculate the VAT amount at 8% in column (4).

Section 2: For goods or services sold during the tax declaration period.

Name of goods, services (2): Enter the name of goods, services sold during the period applying an 8% VAT rate.

Value of goods, services excluding VAT (3): Enter the value of goods, services sold excluding VAT.

VAT rate as prescribed (4): The rate of goods, services when not applying VAT reduction according to Resolution 142/2024/QH15 (10%).

VAT rate after reduction (5): The rate of goods, services after applying VAT reduction according to Resolution 142/2024/QH15 (8%).

VAT of goods, services sold reduced (6): After entering the reduced tax goods/services name and pre-tax price in columns (2) and (3), the HTKK software will automatically calculate the reduced VAT amount in column (6).

Section 3: The VAT discrepancy of goods and services sold and purchased during the period applying the 8% VAT rate: After completing the information in sections (I) and (II), the HTKK software will automatically calculate the tax discrepancy between goods and services sold and purchased during the period applying the 8% VAT rate.

Goods and services not eligible for 2024 VAT reduction in Vietnam 

In Article 1 Decree 72/2024/ND-CP, the VAT reduction is applied to 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 finished metal products, mineral products (excluding coal mining), coke, refined petroleum, chemical products.

Details in Appendix I issued together with Decree 72/2024/ND-CP

- Goods and services subject to special consumption tax.

Details in Appendix II issued together with Decree 72/2024/ND-CP

- Information technology product as per the law on information technology.

Details in Appendix III issued together with Decree 72/2024/ND-CP

- VAT reduction for each type of goods and services stipulated in Clause 1, Article 1 of Decree 72/2024/ND-CP is uniformly applied at import, production, processing, and commercial stages. For extracted coal sold (including cases where mined coal is processed and classified through a closed process and then sold), these items are subject to VAT reduction. Coal items mentioned in Appendix I issued together with Decree 72/2024/ND-CP, in stages other than extraction for sale, are not eligible for VAT reduction.

Corporations and economic groups executing a closed process before selling are also eligible for VAT reduction for extracted coal.

For goods and services in Appendices I, II, and III issued together with Decree 72/2024/ND-CP that are non-VAT or 5% VAT according to the VAT Law, the provisions of the VAT Law are applied, and VAT reduction is not granted.