Vietnam: What is the declaration form for a 20% reduction in the VAT calculation rate according to Decree 72?

Vietnam: What is the declaration form of 20% reduction in the VAT calculation rate according to Decree 72?

The Declaration form for a 20% reduction in the VAT calculation rate for businesses uses Form No. 01 as stated in Appendix IV issued in conjunction with Decree 72/2024/ND-CP.

Download the Declaration form for a 20% reduction in the VAT calculation rate when issuing invoices for goods and services.

Vietnam: What is the declaration form for a 20% reduction in the VAT calculation rate according to Decree 72?

What goods and services are eligible for a 20% reduction in the VAT calculation rate when issuing invoices for goods and services in Vietnam?

The VAT reduction is stipulated at point b, clause 2, Article 1 of Decree 72/2024/ND-CP as follows:

Value Added Tax Reduction

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2. VAT Reduction Rate

a) Businesses calculating VAT using the credit method are to apply an 8% VAT rate for goods and services specified in clause 1 of this Article.

b)** Businesses (including business households and individuals)*** calculating VAT using the percentage-based method on revenue receive a 20% reduction in the calculation percentage rate to determine VAT when issuing invoices for goods and services entitled to VAT reduction as specified in clause 1 of this Article.

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Entities eligible for a 20% reduction in the VAT rate when issuing invoices for goods and services are businesses, which include business households and individuals.

Businesses calculating VAT using the percentage-based method on revenue are eligible for a 20% reduction in the calculation percentage rate to determine VAT when issuing invoices for goods and services eligible for VAT reduction, except for the following goods and services:

- Telecommunications, financial activities, banking, securities, insurance, real estate business, metals and fabricated metal products, mining products (except coal mining), coke, refined petroleum, and chemical products. Details are provided in Appendix I issued in conjunction with Decree 72/2024/ND-CP.

- Products and services subject to special consumption tax. Details are in Appendix II issued in conjunction with Decree 72/2024/ND-CP.

- Information technology according to information technology law. Details are in Appendix III issued in conjunction with Decree 72/2024/ND-CP.

- The VAT reduction for each type of goods and services specified in clause 1 of this Article is uniformly applied at importation, production, processing, and commercial stages.

+ For coal products sold after extraction (including cases where coal is extracted then screened, classified in a closed process before being sold), they are subject to VAT reduction.

+ Coal products listed in Appendix I issued with Decree 72/2024/ND-CP are not subject to VAT reduction at stages other than extraction and sale.

+ Major corporations and economic groups following a closed process before sale are also eligible for VAT reduction for coal extracted and sold.

+ In cases where goods and services listed in Annex I, Annex II, and Annex III of Decree 72/2024/ND-CP are either not subject to VAT or are subject to a 5% VAT rate as per the Law on VAT 2008, the provisions of the Law on VAT 2008 are followed and VAT reduction is not applicable.

What are regulations on VAT reduction in VAT invoices in Vietnam?

Based on clause 3, clause 4, Article 1 Decree 72/2024/ND-CP regarding the procedure and process for VAT reduction:

Value Added Tax Reduction

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3. Procedure and Process

a) For businesses specified in point a, clause 2 of this Article, when making VAT invoices for goods and services eligible for VAT reduction, the VAT rate entry states “8%”; VAT amount; total amount payable by the buyer. Based on the VAT invoices, businesses selling goods and services declare output VAT, and businesses purchasing goods and services declare input VAT deduction based on the reduced tax stated on the VAT invoice.

b) For businesses specified in point b, clause 2 of this Article, when making sales invoices for goods and services eligible for VAT reduction, in the “Amount” column, enter the full prices of goods and services before reduction, in the “Total amount for goods and services” line, enter the amount reduced by 20% of the percentage rate on revenue, with the note: “Reduced by... (amount) equivalent to a 20% reduction in the calculation percentage rate for VAT according to Resolution 142/2024/QH15.”

4. In cases where businesses, as stipulated in point a, clause 2 of this Article, sell goods or provide services with different tax rates, the VAT invoice must clearly state the tax rate for each product or service according to the provisions in clause 3 of this Article.

For businesses as stipulated in point b, clause 2 of this Article, when selling goods or providing services, the sales invoice must clearly state the amount reduced according to the provisions in clause 3 of this Article.

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Thus, the issuance of reduced VAT invoices according to Decree 72 is as follows:

- For businesses calculating VAT using the credit method:

+ VAT rate line: States 8%

+ Fully record: VAT amount and Total amount payable by the buyer.

In cases where businesses sell goods or provide services with different tax rates, the VAT invoice must clearly state the tax rate for each product or service according to the procedure and process for issuing invoices.

- For businesses (including business households and individuals) calculating VAT using the percentage-based method on revenue:

+ “Amount” column: Fully records the prices of goods and services before reduction.

+ In the “Total amount for goods and services” line: Records the amount reduced by 20% of the percentage rate on revenue, with the note: “Reduced by... (amount) equivalent to a 20% reduction in the calculation percentage rate for VAT according to Resolution 142/2024/QH15.”

In cases where businesses sell goods or provide services, the sales invoice must clearly state the amount reduced according to the procedure and process for issuing invoices.