What is the Decree on VAT reduction in 2025 in Vietnam?

What is the Decree on VAT reduction in 2025 in Vietnam?

Pursuant to Article 2 of Decree 180/2024/ND-CP, provisions regarding its effectiveness and implementation are as follows:

Effectiveness and Implementation

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

2. Ministries according to their functions and duties, as well as the People's Committees of provinces and centrally-run cities, shall direct relevant agencies to carry out propaganda, guidance, inspection, and supervision so that consumers understand and enjoy the benefits from the VAT reduction stipulated 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 market price stability (price excluding VAT) from January 1, 2025, to the end of June 30, 2025.

3. During the implementation process, if any difficulties arise, the Ministry of Finance is tasked with providing guidance and resolution.

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

Thus, according to the above provisions, the 2025 VAT reduction decree is Decree 180/2024/ND-CP, which is effective from January 1, 2025, until the end of June 30, 2025.

What is the Decree on VAT reduction in 2025 in Vietnam? (Image from the Internet)

What goods and services are entitled to VAT reduction in Vietnam?

Based on Clause 1, Article 1 of Decree 180/2024/ND-CP, the subjects for VAT reduction are stipulated as follows:

- VAT reduction applies to groups of goods and services currently taxed at a 10% rate, except for the following groups:

+ Telecommunications, financial activities, banking, securities, insurance, real estate business, metal products and prefabricated metal products, mineral products (excluding coal mining), coke, refined petroleum, and chemical products. Details in Appendix 1 issued with Decree 180/2024/ND-CP.

+ Products of goods and services subject to special consumption tax. Details in Appendix 2 issued with Decree 180/2024/ND-CP.

+ Information technology as stipulated by IT law. Details in Appendix 3 issued with Decree 180/2024/ND-CP.

Note:

- The reduction of VAT for each type of goods and services defined in Clause 1, Article 1 of Decree 180/2024/ND-CP is uniformly applied at importation, production, processing, and commercial business stages.

- For coal products that are mined and sold (including instances where mined coal is subsequently screened, graded through a closed loop process before being sold), they fall under VAT reduction.

- Coal products under Appendix 1 issued with Decree 180/2024/ND-CP are not eligible for VAT reduction outside the mining stage.

What are the penalties for late submission of VAT declarations in Vietnam?

Pursuant to Article 13 of Decree 125/2020/ND-CP, penalties for late submission of VAT declarations are stipulated as follows:

(1) A warning is issued for the act of filing VAT declarations late by 1 to 5 days with mitigating circumstances.

(2) A fine ranging from VND 2,000,000 to VND 5,000,000 for late filing of VAT declarations from 1 to 30 days, except cases stipulated in Clause 1, Article 13 of Decree 125/2020/ND-CP.

(3) A fine ranging from VND 5,000,000 to VND 8,000,000 for late filing of VAT declarations beyond the stipulated period from 31 to 60 days.

(4) A fine ranging from VND 8,000,000 to VND 15,000,000 for one of the following violations:

- Late filing of VAT declarations beyond the stipulated period from 61 to 90 days;

- Late filing of VAT declarations beyond the stipulated period from 91 days or more without arising tax payable;

- Failure to file VAT declarations but no arising tax payable;

(5) A fine ranging from VND 15,000,000 to VND 25,000,000 for late filing of VAT declarations beyond 90 days from the deadline for tax declaration submission, with arising tax payable, and when the taxpayer has paid the tax amount, late payment into the state budget before the tax authority announces a tax inspection or auditing decision, or before the tax authority drafts a record of late tax declaration submission according to Clause 11, Article 143 of the Tax Administration Law 2019.

If the fine amount according to this clause is greater than the tax payable arising on the tax return, the maximum fine for this case equals the tax payable arising on the tax return but not lower than the average fine frame stipulated in Clause 4, Article 13 of Decree 125/2020/ND-CP.

Moreover, individuals committing such violations must undertake remedial actions:

- Required to pay the full late tax into the state budget for violations stipulated in clauses 1, 2, 3, 4, and 5 of Article 13 of Decree 125/2020/ND-CP where late filing of VAT declarations leads to late tax payment;

- Required to submit tax declarations, appendices attached to tax declarations for violations under points c, d, Clause 4 of Article 13 of Decree 125/2020/ND-CP.

Note: The penalties for late VAT declaration submission as mentioned above apply to violations committed by organizations. For individuals with the same violations, the fine amount is equal to half the monetary penalty applicable to organizations (as per Clause 5, Article 5 of Decree 125/2020/ND-CP).