What is the Form for declaring a 20% reduction in the VAT rate in Vietnam according to Decree 72?

What is the Form for declaring a 20% reduction in the VAT rate in Vietnam according to Decree 72?

The Form for declaring a 20% reduction in the VAT rate is used by businesses with Form No. 01 as stated in Appendix IV issued in conjunction with Decree 72/2024/ND-CP.

Download the Form for declaring a 20% reduction in the VAT rate when issuing invoices for goods and services.

What is the Form for declaring a 20% reduction in the VAT rate in Vietnam according to Decree 72? (Image from the Internet)

Which entities are the subjects eligible for a 20% reduction in the VAT rate when issuing invoices for goods and services in Vietnam?

The VAT reduction is stipulated in point b, clause 2, Article 1 of Decree 72/2024/ND-CP as follows:

VAT Reduction

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2. Level of VAT Reduction

a) Businesses calculating VAT by the credit method are applied a VAT rate of 8% for goods and services stipulated in clause 1 of this Article.

b) Businesses (including business households and individuals) calculating VAT by the percentage method on revenue are entitled to a 20% reduction in the percentage rate when calculating VAT when issuing invoices for goods and services eligible for VAT reduction as stipulated in clause 1 of this Article.

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The entities eligible for a 20% reduction in the percentage rate when calculating VAT when issuing invoices for goods and services are businesses. The mentioned businesses include business households and individuals.

Businesses calculating VAT by the percentage method on revenue are entitled to a 20% reduction in the percentage rate to calculate VAT when issuing invoices for goods and services eligible for VAT reduction, except for the following goods and services:

- Telecommunications, financial activities, banking, securities, insurance, real estate business, metals and fabricated metal products, mining products (except coal mining), coke, refined petroleum, and chemical products. Details are provided in Appendix I issued in conjunction with Decree 72/2024/ND-CP.

- Products and services subject to special consumption tax. Details are provided in Appendix II issued in conjunction with Decree 72/2024/ND-CP.

- Information technology under information technology law. Details are provided in Appendix III issued in conjunction with Decree 72/2024/ND-CP.

- The reduction of VAT for each type of goods and services stipulated in clause 1 of this Article is uniformly applied at the stages of import, production, processing, and commercial business.

+ For coal mining products sold (including cases where mined coal is subsequently sieved and classified through a closed process before being sold) that are eligible for VAT reduction.

+ Coal products listed in Appendix I issued in conjunction with Decree 72/2024/ND-CP at stages other than the mining stage are not eligible for VAT reduction.

+ General corporations and economic groups following a closed process before selling also fall under the category of VAT reduction for coal mining products sold.

+ In cases where goods and services listed in Appendices I, II, and III issued in conjunction with Decree 72/2024/ND-CP are exempt from VAT or are subject to a 5% VAT rate according to the 2008 VAT Law, they must comply with the 2008 VAT Law and are not entitled to VAT reduction.

What are VAT reduction invoices according to Decree 72?

Based on clause 3, clause 4, Article 1 of Decree 72/2024/ND-CP, the procedures for VAT reduction are specified as follows:

VAT Reduction

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3. Procedures for Implementation

a) For businesses stipulated in point a, clause 2 of this Article, when issuing VAT invoices providing goods and services eligible for VAT reduction, the VAT rate line is indicated as "8%"; VAT; and the total amount the buyer must pay. Based on the VAT invoice, the selling business declares output VAT, and the buying business declares input VAT deduction according to the reduced tax amount indicated on the VAT invoice.

b) For businesses stipulated in point b, clause 2 of this Article, when issuing sales invoices providing goods and services eligible for VAT reduction, under the “Amount” column, the full value of goods and services before reduction is recorded, and under “Total Amount for Goods and Services,” the amount is recorded as reduced by 20% of the percentage rate on revenue. Additionally, a note is added: “reduced by... (amount) corresponding to a 20% VAT rate according to Resolution 142/2024/QH15.”

4. In cases where businesses stipulated in point a, clause 2 of this Article sell goods and provide services with different tax rates, the VAT invoice must clearly indicate the tax rate for each good and service according to the procedure in clause 3 of this Article.

In cases where businesses stipulated in point b, clause 2 of this Article sell goods and provide services, the sales invoice must clearly indicate the reduced amount according to the procedure in clause 3 of this Article.

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Thus, the issuance of VAT reduction invoices according to Decree 72 is as follows:

- For businesses calculating VAT by the credit method:

+ At the tax rate line: Indicate 8%

+ Fully record: VAT and the total amount the buyer must pay.

In cases where businesses sell goods and provide services with different tax rates, the VAT invoice must clearly indicate the tax rate for each good and service according to the stipulated procedures for invoice issuance.

- For businesses (including business households and individuals) calculating VAT by the percentage method on revenue:

+ “Amount” column: Fully record the value of goods and services before reduction.

+ Under “Total Amount for Goods and Services”: Record the amount reduced by 20% of the percentage rate on revenue, and add a note: “reduced by... (amount) equivalent to a 20% VAT rate according to Resolution 142/2024/QH15.”

In cases where businesses sell goods and provide services, the sales invoice must clearly indicate the reduced amount according to the stipulated procedures for invoice issuance.