What is the Official Telegram 08 of General Department of Taxation of Vietnam on implementation of a 2% VAT reduction according to Decree 180?

What is the Official Telegram 08 of General Department of Taxation of Vietnam on implementation of a 2% VAT reduction according to Decree 180?

On December 31, 2024, the General Department of Taxation of Vietnam issued Official Telegram 08/CD-TCT...Download requiring the Tax Departments of provinces and centrally governed cities to proactively disseminate and make known to taxpayers in their regions in order to promptly implement Decree 180/2024/ND-CP of the Government of Vietnam regarding a 2% reduction in value-added tax (VAT reduction), effective from January 1, 2025.

The Official Telegram clearly states that on November 30, 2024, the National Assembly issued Resolution 174/2024/QH15 for the 8th Session, 15th National Assembly, where Clause 8 of this resolution mentions the content:

Continue reducing the VAT rate by 2% for the groups of goods and services specified at point a of Section 1.1 Clause 1 Article 3 of Resolution 43/2022/QH15 of the National Assembly on fiscal and monetary policies to support the Economic Recovery and Development Program from January 1, 2025, to the end of June 30, 2025. The Government of Vietnam is tasked with organizing implementation and ensuring the revenue tasks and the ability to balance the state budget for the year 2025 as decided by the National Assembly.

On December 31, 2024, the Government of Vietnam issued Decree 180/2024/ND-CP stipulating the policy of reducing VAT by 2% according to Resolution 174/2024/QH15 of the National Assembly.

Decree 180/2024/ND-CP prescribes a VAT reduction from January 1, 2025, to the end of June 30, 2025, for groups of goods and services currently applying a VAT rate of 10%, except for certain groups of goods and services.

The General Department of Taxation of Vietnam requires tax departments to proactively disseminate and announce the 2% VAT reduction for taxpayers in their regions to promptly implement Decree 180/2024/ND-CP.

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What is the Official Telegram 08 of General Department of Taxation of Vietnam on implementation of a 2% VAT reduction according to Decree 180? (Image from Internet)

Which types of goods and services are eligible to a 2% VAT reduction in Vietnam according to Decree 180?

Pursuant to Article 1 of Decree 180/2024/ND-CP, goods and services subject to a VAT reduction for the first six months of 2025 are as follows:

(1) Reduction of VAT for groups of goods and services currently applying a 10% tax rate, excluding the following goods and services:

- Telecommunications, financial activities, banking, securities, insurance, real estate business, metals and pre-fabricated metal products, mineral products (excluding coal mining), coke, refined petroleum, chemical products. Details in Appendix 1 attached to Decree 180/2024/ND-CP.

- Goods and services subject to special consumption tax. Details in Appendix 2 attached to Decree 180/2024/ND-CP

- Information technology according to the laws on information technology. Details in Appendix 3 attached to Decree 180/2024/ND-CP

- The VAT reduction for each type of goods and services specified in Clause 1, Article 1 of Decree 180/2024/ND-CP is uniformly applied at the stages of import, production, processing, and commercial business. For coal mining goods sold (including cases where mined coal is processed and classified through a closed procedure before being sold), they are subject to VAT reduction. Coal goods in Appendix I attached to Decree 180/2024/ND-CP, at stages other than sales, are not subject to VAT reduction.

Economic corporations and conglomerates implementing a closed cycle process prior to sales are also subject to VAT reduction for mined coal goods sold.

In cases where goods and services mentioned in Appendices 1, 2, and 3 attached to Decree 180/2024/ND-CP are either not subject to VAT or are subject to a 5% VAT according to the Law on Value Added Tax 2008, they must comply with the Value Added Tax Law and are not eligible for VAT reduction.

According to regulations in Article 8 of the Value Added Tax Law 2008 (amended by Clause 3, Article 1 of the Amended Value Added Tax Law 2013, Clause 2, Article 3 of the Law on Amendments to Tax Laws 2014, and Clause 2, Article 1 of the Law on Amending Value Added Tax, Special Consumption Tax, and Tax Management Law 2016), a 10% tax rate applies to normal goods and services not subject to 0% and 5% rates.

(2) VAT Discount Rate:

- Businesses calculating VAT by the deduction method apply a VAT rate of 8% for goods and services specified in (1)

- Businesses (including household and individual businesses) calculating VAT by a percentage rate on turnover are eligible for a 20% reduction of the percentage rate to calculate VAT when issuing invoices for goods and services eligible for VAT reduction as specified in (1).

What are procedures for implementing a 2% VAT reduction in Vietnam according to Decree 180

According to Clause 3, Article 1 of Decree 180/2024/ND-CP regarding the procedures for implementing a VAT reduction, as follows:

- For businesses specified at point a, Clause 2, Article 1 of Decree 180/2024/ND-CP, when issuing a VAT invoice providing goods and services subject to VAT reduction, in the line indicating the VAT rate, write "8%"; VAT amount; total amount payable by the purchaser.

Based on VAT invoices, businesses selling goods and services declare output VAT, and businesses purchasing goods and services declare input VAT deduction according to the reduced tax noted on the VAT invoice.

- For businesses specified at point b of Clause 2, Article 1 of Decree 180/2024/ND-CP, when issuing sales invoices providing goods and services eligible for VAT reduction, in the "Amount" column, write the full amount of goods and services before the reduction, in the "Total goods and services amount" line, record the amount after a 20% reduction of the percentage rate on turnover, also note: "reduced by... (amount) corresponding to a 20% reduction of the percentage rate for VAT calculation according to Resolution 174/2024/QH15".