What is the tax reduction rate for business establishment pay VAT using the direct method in Vietnam in the first 6 months of 2025?
What is the tax reduction rate for business establishment pay VAT using the direct method in Vietnam in the first 6 months of 2025?
Based on Clause 2, Article 1 of Decree 180/2024/ND-CP, the reduction rate for VAT is specified as follows:
VAT reduction
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- Rate of VAT reduction
a) business establishments calculating VAT by the deduction method are to apply an 8% VAT rate for the goods and services stipulated in Clause 1 of this Article.
b) business establishments (including business establishment households and individuals) paying VAT using the direct method are entitled to a 20% reduction in the percentage rate used to calculate VAT when issuing invoices for goods and services that receive a VAT reduction as specified in Clause 1 of this Article.
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Simultaneously, based on Article 2 of Decree 180/2024/ND-CP, the enactment and implementation of the Decree are regulated as follows:
Effective date and implementation
1. This Decree shall be effective from January 1, 2025, to June 30, 2025.
- Ministries based on their functions and duties, as well as Provincial People's Committees, are to direct relevant agencies to launch, guide, inspect, and supervise so consumers understand and benefit from the VAT reductions outlined in Article 1 of this Decree, focusing on stabilizing the supply and demand of goods and services subject to VAT reduction to maintain a stable market price level (excluding VAT) from January 1, 2025, to June 30, 2025.
- If issues arise during implementation, the Ministry of Finance shall provide guidance and resolution.
- Ministers, heads of ministerial-level agencies, heads of agencies under the Government of Vietnam, chairpersons of Provincial People's Committees, and relevant business establishments, organizations, and individuals are responsible for implementing this Decree.
Thus, from January 1, 2025, to June 30, 2025, business establishments (including business establishment households and individuals) paying VAT using the direct method will receive a reduction of 20% of the percentage rate for goods and services eligible for VAT reduction as specified in Clause 1, Article 1 of Decree 180/2024/ND-CP.
What is the tax reduction rate for business establishment pay VAT using the direct method in Vietnam in the first 6 months of 2025? (Image from the Internet)
What are procedures for implementing VAT reduction for business establishments paying VAT using the direct method in Vietnam?
Based on Clause 3, Article 1 of Decree 180/2024/ND-CP, the procedure for implementing VAT reduction is detailed as follows:
VAT reduction
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- Procedure and implementation steps
a) For business establishments stipulated in point a, Clause 2 of this Article, when creating a VAT invoice for goods and services eligible for VAT reduction, in the VAT rate line, note "8%"; the VAT amount; and the total amount the buyer must pay. Based on the VAT invoice, business establishments selling goods and services declare output VAT, and business establishments purchasing goods and services declare input VAT deduction based on the reduced tax amount indicated on the VAT invoice.
b) For business establishments stipulated in point b, Clause 2 of this Article, when creating a sales invoice for goods and services eligible for VAT reduction, in the "Amount" column, write the full amount for goods and services before reduction, and in the "Total amount of goods and services" line, note the amount after a 20% reduction in the percentage rate on revenue, with a note: "reduced by... (amount) corresponding to a 20% reduction in the percentage rate for calculating VAT per Resolution No. 142/2024/QH15".
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Thus, the procedure and steps to implement VAT reduction for business establishments paying VAT using the direct method are executed when issuing sales invoices for goods and services eligible for VAT reduction as follows:
- In the "Amount" column, write the full amount for goods and services before reduction.
- In the "Total amount of goods and services" line, write the amount after a 20% reduction in the percentage rate on revenue, with a note: “reduced by... (amount) corresponding to a 20% reduction in the percentage rate for calculating VAT according to Resolution No. 174/2024/QH15”.
Which entities are eligible for VAT reduction in Vietnam?
Based on Clause 1, Article 1 of Decree 180/2024/ND-CP, the entities eligible for VAT reduction are defined as follows:
- VAT reduction for groups of goods and services currently applying a 10% tax rate, excluding the following groups:
+ Telecommunications, financial activities, banking, securities, insurance, real estate business establishment, metals and fabricated metal products, mineral products (excluding coal mining), coke, refined petroleum, chemical products. Details are in Appendix 1 issued with Decree 180/2024/ND-CP.
+ Goods and services subject to special consumption tax. Details are in Appendix 2 issued with Decree 180/2024/ND-CP.
+ Information technology under the laws on information technology. Details are in Appendix 3 issued with Decree 180/2024/ND-CP.
Note:
- The VAT reduction for each type of goods and services outlined in Clause 1, Article 1 of Decree 180/2024/ND-CP is uniformly applied in the stages of import, production, processing, and commercial business establishment.
- For coal products sold (including coal mined and then screened, classified in a closed process before selling) are subject to a VAT reduction.
- Coal listed in Appendix 1 issued with Decree 180/2024/ND-CP, at stages other than extractive selling, are not eligible for a VAT reduction.
