Vietnam: When shall the declaration of VAT reduction appendix on HTKK 5.2.2 be negative?

Vietnam: When shall the declaration of VAT reduction appendix on HTKK 5.2.2 be negative?

In Section III of the Appendix on VAT Reduction of 2% according to Resolution 142/2024/QH15 on HTKK 5.2.2 software, it shows that after the taxpayer declares input and output goods subject to an 8% VAT rate in the period, the VAT difference of goods and services sold and bought in the period with an 8% VAT rate is calculated as follows: Output VAT on goods and services sold in the period reduced - Input VAT on goods and services deductible in the period (HTKK software will automatically calculate the tax difference).

When the VAT of goods and services sold in the period reduced that the taxpayer enters is greater than the VAT of goods and services purchased deductible in the period, the tax difference is negative.

Note: In the case that the taxpayer only has input goods and services and no output in the tax period, they are not required to apply the VAT reduction appendix according to Resolution 142/2024/QH15.

Vietnam: When shall the declaration of VAT reduction appendix on HTKK 5.2.2 be negative? (Image from the Internet)

What goods and services are not subject to VAT reduction in Appendix of Decree 72 in Vietnam?

On June 30, 2024, the Government of Vietnam issued Decree 72/2024/ND-CP on VAT reduction policy following Resolution 142/2024/QH15.

Under Article 1 of Decree 72/2024/ND-CP, VAT reduction is applied for goods and services currently subject to a 10% VAT rate, excluding the following groups of goods and services:

- Telecommunications, financial activities, banking, securities, insurance, real estate business, metal and pre-fabricated metal products, mining products (excluding coal mining), coke, refined petroleum, chemical products.

Details in Appendix 1 issued with Decree 72/2024/ND-CP

- Products of goods and services subject to special consumption tax.

Details in Appendix 2 issued with Decree 72/2024/ND-CP

- Information technology according to information technology laws.

Details in Appendix 3 issued with Decree 72/2024/ND-CP

Additionally, the reduction of VAT on each type of goods and services stipulated in Clause 1, Article 1 of Decree 72/2024/ND-CP is applied uniformly at the stages of import, production, processing, and commercial business. For coal products mined and sold (including cases where the coal mined is then sorted and classified through a closed process before being sold), they are subject to VAT reduction. Coal items listed in Appendix 1 issued with Decree 72/2024/ND-CP are not eligible for VAT reduction at stages other than extraction and selling.

Corporations and economic groups conducting closed process sales are also subject to VAT reduction for coal mined and sold.

In the case where goods and services specified in Appendices 1, 2, and 3 issued with Decree 72/2024/ND-CP are exempt from VAT or subject to 5% VAT as per the VAT Law, they adhere to the VAT Law regulations and are not eligible for VAT reduction.

Vietnam: Is VAT reduction under Decree 72 effective until the end of 2024?

Pursuant to the provisions in Clause 1, Article 2 of Decree 72/2024/ND-CP as follows:

Effective Date and Implementation

1. This Decree takes effect from July 1, 2024, until the end of December 31, 2024.

2. Ministries according to their functions and the People's Committees of provinces and centrally-run cities direct relevant agencies to implement dissemination, guidance, inspection, and supervision to ensure that consumers understand and benefit from the VAT reduction provided in Article 1 of this Decree, focusing on solutions to stabilize the supply and demand of goods and services subject to VAT reduction to maintain stable market prices (excluding VAT) from July 1, 2024, to December 31, 2024.

3. If any issues arise during implementation, the Ministry of Finance will provide guidance and resolution.

4. Ministers, heads of ministerial-level agencies, heads of agencies under the Government of Vietnam, chairpersons of the People's Committees of provinces and centrally-run cities, and related enterprises, organizations, and individuals are responsible for implementing this Decree.

Decree 72/2024/ND-CP is effective from July 1, 2024, until December 31, 2024.

This also means that the reduction regulation of VAT to 8% only applies until December 31, 2024.

From January 1, 2025, the VAT rate for eligible goods and services will revert to 10% (unless a different governing document is issued).