What are amendments and supplements to provisions on deductions and refunds for VAT in Vietnam?

What are amendments and supplements to provisions on deductions and refunds for VAT in Vietnam?

According to point a, clause 1, Section 3, Article 1 of Decision 508/QD-TTg 2022, it is stipulated:

III. IMPLEMENTATION SOLUTIONS FOR THE STRATEGY

1. Regarding tax policy reform

a) For VAT: expanding the tax base by reducing the group of goods and services that are not subject to VAT and the group of goods and services subject to a 5% tax rate; moving towards primarily applying a single tax rate; researching to increase the VAT rate according to a roadmap; reviewing and adjusting the revenue threshold for the application of the deduction method to suit actual conditions; researching to apply a uniform method of tax calculation by percentage of revenue for taxpayers with revenue below the threshold or not eligible to apply the deduction method; completing regulations related to VAT on exported goods and services, ensuring they properly reflect the nature and are consistent with international practices. Researching to amend, supplement the provisions on tax deductions, VAT refunds in a simple, transparent manner and in line with the relevant laws;

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Accordingly, the solution to implement the strategy for VAT policy reform according to the Tax reform strategy until 2030 is as follows:

- Expanding the tax base by reducing the group of goods and services not subject to VAT and the group of goods and services subject to a 5% tax rate;

- Moving towards primarily applying a single tax rate;

- Researching to increase the VAT rate according to a roadmap;

- Reviewing and adjusting the revenue threshold for the application of the deduction method to suit actual conditions;

- Researching to apply a uniform method of tax calculation by percentage of revenue for taxpayers with revenue below the threshold or not eligible to apply the deduction method;

- Completing regulations related to VAT on exported goods and services, ensuring they properly reflect the nature and are consistent with international practices.

- Researching to amend, supplement the provisions on tax deductions, VAT refunds in a simple, transparent manner and in line with the relevant laws.

Thus, when implementing the strategy for VAT policy reform according to the Tax reform strategy until 2030, research and amendments, supplements to the provisions on tax deductions, and VAT refunds will be carried out in a simple, transparent manner and in line with the relevant laws.

What are amendments and supplements to provisions on deductions and refunds for VAT in Vietnam? (Image from the Internet)

What are methods of the VAT deduction in Vietnam?

According to clause 1, Article 10 of the 2008 Law on VAT, amended by clause 4, Article 1 of the 2013 Law on amendments to the Law on VAT, the VAT deduction method is stipulated as follows:

- The VAT payable by the deduction method is the output VAT minus the deductible input VAT;

- The output VAT is the total VAT of goods and services sold, recorded on the VAT invoice.

The VAT of goods and services sold recorded on the VAT invoice is the taxable price of the goods and services sold multiplied by the VAT rate of those goods and services.

In the case of using payment vouchers listing the payment price as the price including VAT, the output VAT is determined by the payment price minus the taxable price of VAT determined according to the provisions of point k, clause 1, Article 7 of the 2008 Law on VAT;

- The deductible input VAT is the total VAT recorded on the VAT invoices for purchased goods and services, VAT payment vouchers for imported goods, and meeting the conditions stipulated in Article 12 of the 2008 Law on VAT, amended by clause 6, Article 1 of the 2013 Law on amendments to the Law on VAT.

Additionally, the deduction method applies to business establishments that fully comply with accounting policies, invoices, and documents as stipulated by the law on accounting, invoices, and documents, including:

- Business establishments with annual revenue from the sale of goods and provision of services of one billion dong or more, excluding business households and individuals;

- Business establishments voluntarily registering to apply the deduction method, excluding business households and individuals.

What are tax credit methods applicable to business establishments in Vietnam?

According to clause 2, Article 10 of the 2008 Law on VAT, amended by clause 4, Article 1 of the 2013 Law on amendments to the Law on VAT, the deduction method applies to business establishments that fully comply with accounting policies, invoices, and documents as stipulated by the law on accounting, invoices, and documents, including:

- Business establishments with annual revenue from the sale of goods and provision of services of one billion dong or more, excluding business households and individuals;

- Business establishments voluntarily registering to apply the deduction method, excluding business households and individuals.