When will a reduction of VAT to 8% be applied in Vietnam?

When will a reduction of VAT to 8% be applied in Vietnam?

Pursuant to Article 2 of Decree 72/2024/ND-CP stipulating the effective implementation of the VAT reduction policy as follows:

Effectiveness and Implementation

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

2. Ministries according to their functions, tasks, and the People's Committees of provinces and centrally-affiliated cities shall direct relevant agencies to implement propaganda, guidance, inspection, supervision to ensure that consumers understand and benefit from the VAT reduction stipulated in Article 1 of this Decree, focusing on solutions to stabilize the supply and demand of goods and services subject to tax reduction, aiming to maintain stable market prices (excluding VAT) from July 1, 2024, until the end of December 31, 2024.

3. During implementation, if issues arise, the Ministry of Finance is entrusted to guide and resolve them.

4. Ministers, Heads of ministerial-level agencies, Heads of government-attached agencies, Chairmen of People's Committees of provinces and centrally-affiliated cities, and related enterprises, organizations, and individuals are responsible for enforcing this Decree.

From the above stipulation, it can be seen that the policy of reducing VAT to 8% is applied until the end of December 31, 2024.

When will a reduction of VAT to 8% be applied in Vietnam? (Image from Internet)

Which goods and services shall an 8% VAT rate apply to in Vietnam?

According to clause 1, Article 1 of Decree 72/2024/ND-CP, the VAT reduction applies to goods and services currently subject to a 10% tax rate, excluding the following groups:

- Telecommunications, financial activities, banking, securities, insurance, real estate business, metals and fabricated metal products, mining products (excluding coal mining), coke, refined petroleum, chemical products. Details in Appendix I attached to Decree 72/2024/ND-CP.

- Goods and services subject to special consumption tax. Details in Appendix II attached to Decree 72/2024/ND-CP.

- Information technology as per information technology legislation. Details in Appendix III attached to Decree 72/2024/ND-CP.

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

+ For coal mining goods sold (including cases where mined coal is then screened, classified through a closed process before being sold), they are subject to the VAT reduction.

+ Coal products listed in Appendix I attached to Decree 72/2024/ND-CP, at stages other than mining for sale are not eligible for VAT reduction.

+ Corporations and economic groups engaging in a closed process for sale also fall under the category of VAT reduction for coal mining goods sold.

+ In cases where goods and services listed in Appendices I, II, and III attached to Decree 72/2024/ND-CP are not subject to VAT or are subject to 5% VAT, they shall comply with the regulations of the VAT Law and are not eligible for the VAT reduction.

What are cases of exemption from VAT declarance, calculation, or payment in Vietnam?

According to clause 3, Article 2 of Decree 209/2013/ND-CP, the cases that are not required to declare, calculate, or pay VAT are defined as follows:

- Organizations and individuals receiving compensation, bonuses, support money, transfer of emission rights, and other financial receipts.

- Organizations and individuals producing and trading in Vietnam purchasing services from foreign organizations without a permanent establishment in Vietnam, non-resident foreign individuals in Vietnam, including: Repair of transportation means, machinery, equipment (including materials, replacement parts); advertising, marketing; investment and trade promotion; brokerage of goods and services provision; training; sharing postal and international telecommunications charges with foreign countries where these services are performed outside Vietnam.

- Organizations and individuals not engaged in business activities, not subject to VAT, selling assets.

- Organizations and individuals transferring investment projects for the production, business of goods, services subject to VAT to enterprises, cooperatives.

- Agricultural, livestock, aquaculture products not processed into other products or only undergone rudimentary processing sold to enterprises, cooperatives, except cases stipulated in Clause 1, Article 5 of the Law on VAT 2008.