What is the handling of VAT reduction after the invoice has been issued and declared in Vietnam?

What is the handling of VAT reduction after the invoice has been issued and declared in Vietnam?

According to Clause 5, Article 1 of Decree 72/2024/ND-CP, it is stipulated as follows:

Reduction of Value Added Tax (VAT)

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5. In cases where the business establishment has issued an invoice and declared according to the tax rate or percentage for calculating VAT that has not been reduced as per this Decree, the seller and the buyer shall handle the issued invoice according to legal regulations on invoices and documents. Based on the processed invoice, the seller shall declare adjustments to the output tax, and the buyer shall declare adjustments to the input tax (if any).

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Thus, in cases where the business establishment has issued an invoice and declared according to the tax rate or percentage for calculating VAT but it has not been reduced as per the regulations, the seller and buyer shall process the issued invoice as per legal regulations. Based on the processed invoice, the seller declares adjustments to the output tax, and the buyer declares adjustments to the input tax (if any).

What is the handling of VAT reduction after the invoice has been issued and declared in Vietnam? (Image from the Internet)

How to issue an invoice with VAT reduction in Vietnam?

According to Clauses 3 and 4, Article 1 of Decree 72/2024/ND-CP, the procedures for reducing VAT are specified as follows:

Reduction of Value Added Tax (VAT)

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3. Procedures for implementation

a) For business establishments specified at point a, clause 2 of this Article, when issuing a VAT invoice for goods and services subject to VAT reduction, the VAT rate line should state “8%”; VAT amount; total amount payable by the buyer. Based on the VAT invoice, the business establishment selling goods and services shall declare the output VAT, and the business establishment buying goods and services shall declare the deduction of input VAT according to the reduced tax amount recorded on the VAT invoice.

b) For business establishments specified at point b, clause 2 of this Article, when issuing a sales invoice for goods and services subject to VAT reduction, in the “Amount” column, the full amount for goods and services before reduction, in the “Total amount for goods and services” line, write according to the amount reduced by 20% of the percentage on revenue and annotate: “reduced by... (amount) corresponding to 20% of the percentage to calculate VAT according to Resolution No. 142/2024/QH15.”

4. In cases where business establishments specified at point a, clause 2 of this Article apply different tax rates when selling goods and providing services, the VAT invoice must clearly state the tax rate for each goods and service as per clause 3 of this Article.

In cases where business establishments specified at point b, clause 2 of this Article sell goods and provide services, the sales invoice must state the amount reduced in accordance with clause 3 of this Article.

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Thus, when issuing a VAT invoice, the VAT reduction is recorded as follows:

- For business establishments calculating VAT by the deduction method:

+ At the tax rate line: Record 8%

+ Record fully: VAT amount and the total amount payable by the buyer.

In cases where business establishments sell goods and provide services applying different tax rates, the VAT invoice must clearly state the tax rate for each goods and service in accordance with the regulations on the procedures for issuing invoices.

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

+ "Amount" column: Record the full amount for goods and services before reduction.

+ In the "Total amount for goods and services" line: Record according to the amount reduced by 20% of the percentage on revenue and annotate: “reduced by... (amount) corresponding to 20% of the percentage to calculate VAT according to Resolution No. 142/2024/QH15.”

In cases where business establishments sell goods and provide services, the sales invoice must clearly state the amount reduced in accordance with the procedures for issuing invoices.

Until when is the VAT reduction under Decree 72 applicable in Vietnam?

According to Clause 1, Article 2 of Decree 72/2024/ND-CP:

Effectiveness and implementation

1. This Decree is effective from July 1, 2024, to the end of December 31, 2024.

2. The ministries according to their functions, tasks, and the People's Committee of the province, centrally-affiliated cities direct relevant agencies to deploy propaganda, guidance, inspection, and supervision so that consumers understand and benefit from the VAT reduction policy stipulated in Article 1 of this Decree, with a focus on solutions to stabilize the supply and demand of goods and services subject to VAT reduction, to maintain stable market prices (prices excluding VAT) from July 1, 2024, to the end of December 31, 2024.

3. During the implementation process, if any problems arise, the Ministry of Finance is authorized to guide and resolve them.

4. The Ministers, Heads of Ministerial-level agencies, Heads of agencies under the Government of Vietnam, Chairman of the People's Committee of the province, centrally-affiliated cities, and related businesses, organizations, and individuals are responsible for the implementation of this Decree.

Decree 72/2024/ND-CP takes effect from July 1, 2024, to the end of December 31, 2024.

This also means that the provision reducing VAT to 8% only applies until December 31, 2024.

From January 1, 2025, the VAT rate for goods and services that were reduced will return to the rate of 10% (unless otherwise regulated by other documents).