Which goods are entitled to a VAT reduction from 10% to 8% in Vietnam from January 1, 2025, to June 30, 2025?

Which goods are entitled to a VAT reduction from 10% to 8% in Vietnam from January 1, 2025, to June 30, 2025?

Pursuant to Article 1 of Decree 180/2024/ND-CP, the official reduction of VAT from 10% to 8% applies to groups of 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 products made from pre-cast metals, mining products (excluding coal mining), coke, refined petroleum, chemical products. Details are in Appendix I issued with Decree 180/2024/ND-CP.

- Products and services subject to special consumption tax. Details are in Appendix II issued with Decree 180/2024/ND-CP.

- Information technology as per the law on information technology. Details are in Appendix III issued with 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 importation, production, processing, and commercial business stages. For exploited coal sold (including cases where exploited coal is then screened, classified, and only sold after a closed process), the VAT is reduced. Coal products under Appendix I of Decree 180/2024/ND-CP, at stages other than the extraction and sale phase, are not eligible for VAT reduction.

Corporations and economic groups executing a closed process for selling extracted coal are also subject to VAT reduction for this product.

In cases where goods and services listed in Appendices I, II, and III issued with Decree 180/2024/ND-CP are subject to non-taxable VAT or a 5% VAT according to the Law on Value Added Tax, they shall comply with the Law on Value Added Tax and are not eligible for VAT reduction.

Which goods are entitled to a VAT reduction from 10% to 8% in Vietnam from January 1, 2025, to June 30, 2025? (Image from the Internet)

Which entities are VAT payers in Vietnam?

Pursuant to Article 3 of Circular 219/2013/TT-BTC, the VAT payers are organizations and individuals manufacturing and trading goods and services subject to VAT in Vietnam, regardless of industry, form, or business organization (hereinafter referred to as business establishments) and organizations and individuals importing goods, purchasing services from abroad subject to VAT (hereinafter referred to as importers) including:

- Business organizations established and registered under the Law on Enterprises 2020, Law on Cooperatives 2023, and other specialized business laws;

- Economic organizations under political organizations, socio-political organizations, social organizations, professional-social organizations, people's armed units, public service organizations, and other organizations;

- Enterprises with foreign investment, and foreign parties engaging in business cooperation under the Law on Investment; foreign organizations and individuals conducting business in Vietnam but not establishing a legal entity in Vietnam;

- Individuals, households, independent business groups, and other entities with production, trading, and importation activities;

- Organizations and individuals producing business in Vietnam purchasing services (including services associated with goods) from foreign organizations without a permanent establishment in Vietnam, individuals outside Vietnam not residing in Vietnam, then the organization or individual purchasing the service is the taxpayer, except in cases not required to declare, calculate, pay VAT as guided in Clause 2, Article 5 of Circular 219/2013/TT-BTC.

Regulations on permanent establishments and non-resident status follow the law on corporate income tax and the law on personal income tax.

- Branches of export processing enterprises established to conduct the trading of goods and activities related directly to the trading of goods in Vietnam as prescribed by laws on industrial parks, export processing zones, and economic zones.

When is the time to determine VAT in Vietnam?

Pursuant to Article 8 of Circular 219/2013/TT-BTC regarding the time for determining VAT:

- For the sale of goods, it is at the time of transfer of ownership or right to use the goods to the buyer, irrespective of whether payment has been received or not.

- For service provision, it is at the time of completing the service provision or the time of invoicing for service provision, irrespective of whether payment has been received or not.

- For telecommunications services, it is at the time of completing data reconciliation for telecommunications service charges under the economic contract between telecommunications service business establishments, but no more than 2 months from the month the telecommunications service charges arise.

- For the supply of electricity and clean water, it is the date of recording consumption on the meter to record on the billing invoice.

- For real estate business activities, infrastructure construction, house construction for sale, transfer, or lease, it is the time of collecting money according to the project's progress or as defined in the contract. Based on the collected amount, the business establishment declares the output VAT incurred in the period.

- For construction and installation activities, including shipbuilding, it is at the time of acceptance, delivery of works, work categories, completed construction, and installation volume, irrespective of whether or not the money has been collected.

- For imported goods, it is the time of registration of the customs declaration.