What is the VAT reduction rate in Vietnam in the first 6 months of 2025?

What is the VAT reduction rate in Vietnam in the first 6 months of 2025?

Resolution 218/NQ-CP dated November 12, 2024, directed the Ministry of Finance to lead, cooperate with relevant agencies and localities to study and propose the development of a National Strategy on waste prevention and control, following the directives of the General Secretary, and report to the Prime Minister of the Government of Vietnam in November 2024. This resolution also emphasized the requirement for the Ministry of Finance to promptly summarize and evaluate tax exemption, reduction, deferral policies, and land levies for 2025 to be implemented from the beginning of the year.

One notable content in the resolution is the continued extension of VAT (value-added tax) reduction in the first 6 months of 2025, which will be reported at the 8th session of the National Assembly. However, as of now, there is no official document announcing the percentage of VAT reduction for the first half of 2025.

Through this resolution, the Government of Vietnam requests the Ministry of Finance and relevant agencies to quickly finalize necessary policy proposals to assist businesses and citizens amid economic recovery post-pandemic and other impacting factors.

See details in Resolution 218/NQ-CP dated November 12, 2024: Download

What is the VAT reduction rate in Vietnam in the first 6 months of 2025? (Image from the Internet)

What are the legislative documents on VAT reduction in Vietnam from 2022 until January 1, 2025?

- Legislative documents on VAT reduction in 2022

+ Official Dispatch 370/TCHQ-TXNK from the General Department of Customs

++ Instructions for customs declarants to declare VAT 8% on the VNACCS/VCIS system.

+ Official Telegram 01/CĐ-TCT from the General Department of Taxation on the implementation of the Decree detailing the implementation of tax exemption, reduction policies

+ Official Telegram 02/CĐ-TCT from the General Department of Taxation on enhancing the implementation of VAT reduction

++ Enhance publicity, guide individuals and businesses on issuing VAT invoices applying a VAT rate of 8% according to regulations.

+ Official Dispatch 521/TCHQ-TXNK from the General Department of Customs

++ Guidance on VAT declaration for imported goods based on actual imported goods, cross-referencing goods subject to VAT and the applicable VAT rate as per regulations. VAT reduction policy on imported goods.

+ On March 23, 2022, the Ministry of Finance issued Official Dispatch 2688/BTC-TCT regarding VAT

++ Guidance on goods, services groups not eligible for VAT reduction and the timing of issuing invoices.

- legislative documents on VAT reduction in 2023

+ Resolution 101/2023/QH15 on the 5th session, 15th National Assembly

++ Implement a 2% VAT rate reduction from July 1, 2023, to December 31, 2023.

- legislative documents on VAT reduction in 2024

+ Decree 72/2024/NĐ-CP on VAT reduction policy according to Resolution 142/2024/QH15

++ Reduce VAT from July 1, 2024, until January 1, 2025.

Where to submit VAT return in Vietnam?

According to Article 45 of the Tax Administration Law 2019, it specifies where to submit return as follows:

- Taxpayers submit return at the tax administration directly managing them.

- In cases of submitting return under a one-stop-shop mechanism, the location for submission follows the regulations of that mechanism.

- The location for submitting return for export, import goods follows the regulations of the Customs Law.

- The Government of Vietnam regulates the location for submitting return in the following cases:

+ Taxpayers having multiple production, business activities;

+ Taxpayers conducting production, business activities in multiple locations; taxpayers incurring tax obligations for taxes declared and paid per each occurrence;

+ Taxpayers incurring tax obligations for revenues from land; rights to exploit water resources, mineral resources;

+ Taxpayers incurring tax obligations for individual income tax finalization;

+ Taxpayers declaring taxes through electronic transactions and other necessary cases.

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

According to the provisions of Article 13 of Decree 125/2020/NĐ-CP, it stipulates penalties for violations of the tax return submission deadlines as follows:

- A warning for lateness in filing return from 1 to 5 days with mitigating circumstances.

- A fine from 2,000,000 VND to 5,000,000 VND for lateness in filing return from 1 to 30 days, except for cases specified in clause 1 of this Article.

- A fine from 5,000,000 VND to 8,000,000 VND for lateness in filing return from 31 to 60 days.

- A fine from 8,000,000 VND to 15,000,000 VND for any of the following acts:

- Filing return late from 61 to 90 days;

- Filing return late from 91 days or more but no tax is due;

- Not filing return but no tax is due;

- Not submitting appendices under tax management regulations for businesses with related-party transactions attached to the enterprise income tax finalization documentation.

- A fine from 15,000,000 VND to 25,000,000 VND for filing return more than 90 days late from the deadline, with incurred tax due, and taxpayers have fully paid the tax, late payment interest to the state budget before the tax authority announces a tax inspection or audit decision or before the tax authority prepares a record on the late submission of return as stipulated in clause 11 Article 143 of the Tax Administration Law.

Note: For the same administrative tax and invoice violation, the fine for organizations is twice the amount for individuals.