What are regulations on effect of the Decree 180 on VAT reduction in Vietnam according to Resolution 174 2024?

What are regulations on effect of the Decree 180 on VAT reductionin Vietnam according to Resolution 174 2024?

Pursuant to Article 2 of Decree 180/2024/ND-CP providing for the effective date and implementation as follows:

Effective date and implementation

1. This Decree shall take effect from January 1, 2025, until the end of June 30, 2025.

2. Ministers and provincial People's Committees shall direct the relevant agencies to propagate, guide, inspect, and supervise to ensure that consumers understand and benefit from the VAT reduction under Article 1 of this Decree, focusing on solutions to stabilize the supply-demand balance of goods and services subject to the VAT reduction to maintain market price stability (pre-VAT prices) from January 1, 2025, to the end of June 30, 2025.

3. During the implementation process, should any difficulties arise, the Ministry of Finance shall provide guidance and resolve them.

4. Ministers, heads of ministerial-level agencies, heads of agencies under the Government of Vietnam, and chairpersons of People's Committees of provinces and centralized cities, as well as businesses, organizations, and individuals concerned, are responsible for the implementation of this Decree.

According to the regulations, Decree 180/2024/ND-CP stipulating the VAT reduction under Resolution 174/2024/QH15 is effective from January 1, 2025, until the end of June 30, 2025.

What are regulations on effect of the Decree 180 on VAT reductionin Vietnam according to Resolution 174 2024? (Image from the Internet)

Which entities are VAT payers in Vietnam from July 1, 2025?

Pursuant to Article 4 of the Law on Value Added Tax 2024 which stipulates the entities liable for VAT from July 1, 2025, as follows:

- Organizations, households, and individuals producing and trading goods and services liable to value added tax (hereinafter referred to as business establishments).

- Organizations and individuals importing goods subject to value added tax (hereinafter referred to as importers).

- Organizations and individuals conducting business in Vietnam purchasing services (including cases of purchasing services related to goods) from foreign organizations without a permanent establishment in Vietnam or individuals abroad who are non-residents in Vietnam, except as provided for in Clauses 4 and 5 of this Article; organizations conducting business in Vietnam purchasing goods and services to conduct oil and gas exploration and exploitation activities from foreign organizations without a permanent establishment in Vietnam or individuals abroad who are non-residents in Vietnam.

- Foreign suppliers without a permanent establishment in Vietnam conducting e-commerce or digital platform based business with organizations and individuals in Vietnam (hereinafter referred to as foreign suppliers); organizations managing digital platforms from abroad which deduct and pay taxes on behalf of foreign suppliers; Vietnamese business organizations applying the credit method for value added tax calculation purchasing services from foreign suppliers without a permanent establishment in Vietnam through e-commerce channels or digital platforms and deducting and paying taxes on behalf of foreign suppliers.

- Organizations managing e-commerce transaction exchanges and digital platforms with payment functions that deduct, pay, and declare the deducted taxes on behalf of business households and individual business entities on e-commerce exchanges and digital platforms.

- the Government of Vietnam details Clauses 1, 4, and 5 of Article 4 of the Law on Value Added Tax 2024; specifying taxpayers in cases where foreign suppliers provide services to business organizations in Vietnam using the credit method for tax deduction under Clause 4 of Article 4 of the Law on Value Added Tax 2024.

What are prohibited acts in VAT deduction and refund in Vietnam?

According to Article 13 of the Law on Value Added Tax 2024 stipulating the prohibited acts in VAT deduction and refund as follows:

- Buying, giving, selling, organizing advertising, brokering the purchase, and sale of invoices.

- Creating transactions of buying, selling goods, and providing services that do not exist or transactions that are not conformable with the law.

- Issuing invoices for selling goods and providing services during the business suspension period, except for issuing invoices to hand over to customers to execute contracts signed before the business suspension notification date.

- Using illegal invoices and documents, illegally using invoices and documents as prescribed by the Government of Vietnam.

- Failing to transfer electronic invoice data to the tax authorities as prescribed.

- Distorting, using for improper purposes, unauthorized access, destroying information systems related to invoices and documents.

- Offering, accepting, brokering bribes, or conducting other actions related to invoices and documents to deduct taxes, refund taxes, embezzle tax money, or evade value added tax.

- Colluding, covering up; colluding between tax management officials, tax authorities, and business establishments, importers, among business establishments, importers in using illegal invoices and documents, illegally using invoices and documents to deduct taxes, refund taxes, embezzle tax funds, or evade value added tax.

The Law on Value Added Tax 2024 has been passed by the National Assembly and takes effect from July 1, 2025, except for the revenue level of households and individuals engaged in production and business activities not subject to tax as prescribed in Clause 25 Article 5 Law on Value Added Tax 2024 and Article 17 of the Law on Value Added Tax 2024, which takes effect from January 1, 2026.