What goods are subject to VAT reduction in Vietnam 2025 according to the Draft Decree?

What are regulations on the Draft Decree on VAT reduction in Vietnam for 2025?

According to the Resolution of the National Assembly approved on November 30, 2024, the Ministry of Finance has announced the draft Decree that stipulates the policy for VAT reduction.

The Draft Decree on VAT reduction for 2025 is as follows:

See the Draft Decree on VAT reduction for 2025: Download

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

What goods are subject to VAT reduction in Vietnam 2025 according to the Draft Decree? (Image from the Internet)

What goods are subject to VAT reduction in Vietnam 2025 according to the Draft Decree?

According to Clause 1, Article 1 of the Draft Decree, the value-added tax will be reduced for groups of goods and services currently applying the 10% tax rate, except for the following groups of goods and services:

- Telecommunications, financial activities, banking, securities, insurance, real estate business, metals, and products from cast metals, mining products (except coal mining), coke, refined petroleum, chemical products. Details in Appendix 1 issued with this Decree.

- Goods and services subject to special consumption tax. Details in Appendix 2 issued with this Decree.

- Information technology according to information technology laws. Details in Appendix 3 issued with this Decree.

- The reduction of value-added tax for each type of goods and services shall be uniformly applied at the stages of importation, production, processing, and commercial business.

For the extracted coal sold (including cases where coal is extracted and then screened, classified through a closed process and sold), it is subject to VAT reduction. Coal items under Appendix 1 issued with this Decree at stages other than the extraction and sale do not receive VAT reduction.

Corporations and economic groups implementing a closed process for new sales are also subject to VAT reduction for extracted coal sold.

In cases where goods and services listed in Appendices 1, 2, and 3 issued with this Decree are exempt from VAT or subject to a 5% VAT rate under the Law on Value-Added Tax, they must comply with the Law on Value-Added Tax and are not eligible for VAT reduction.

According to the draft, business establishments calculating value-added tax by the credit method shall apply an 8% VAT rate for goods and services as mentioned above.

Business establishments (including business households and individual businesses) calculating VAT by the % method on revenue will receive a 20% reduction in the percentage used to calculate VAT when issuing invoices for goods and services reduced as mentioned above.

See Appendix of the Draft Decree on VAT reduction for 2025: Download

What is the appendix of the Decree on VAT reduction in Vietnam until the end of 2024?

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

In Article 1 of Decree 72/2024/ND-CP, VAT is reduced for groups of goods and services currently applying the 10% tax rate, except for the following groups of goods and services:

- Telecommunications, financial activities, banking, securities, insurance, real estate business, metals, and products from cast metals, mining products (except coal mining), coke, refined petroleum, chemical products.

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

- 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

Furthermore, the VAT reduction for each type of goods and services stipulated in Clause 1, Article 1 of Decree 72/2024/ND-CP will be uniformly applied across importation, production, processing, and commercial business stages. For the items of extracted coal sold (including cases where coal is extracted and then screened, classified through a closed process and sold out), it is subject to VAT reduction. Coal items under Appendix 1 issued with Decree 72/2024/ND-CP, other than the extraction and sale, do not benefit from the VAT reduction.

Corporations and economic groups implementing a closed process for new sales are also subject to VAT reduction for extracted coal sold.

In cases where goods and services listed in Appendices 1, 2, and 3 issued with Decree 72/2024/ND-CP are exempt from VAT or apply a 5% VAT rate under the Law on Value-Added Tax, they must comply with the VAT Law and are not eligible for VAT reduction.

>> Download the Appendix of Decree 72 on VAT Reduction until the End of 2024 here