Which types of goods and services are eligible for a VAT reduction in Vietnam in the first half of 2025?

Which types of goods and services are eligible for a 2% VAT reduction in Vietnam in the first six months of 2025?

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

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

- Telecommunications, financial activities, banking, securities, insurance, real estate business, metals and fabricated metal products, mineral products (excluding coal extraction), coke, refined petroleum, and chemical products. Details are provided in Appendix 1 attached to this Decree.

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

- Information technology according to IT law. Details are 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 stages of importation, production, processing, and commercial business. For coal products extracted and sold (including cases where coal is extracted, screened, and classified through a closed process before being sold), they are eligible for a VAT reduction. Coal items in Appendix I attached to Decree 180/2024/ND-CP at stages other than extraction and sale are not eligible for VAT reduction.

General companies and economic groups that conduct a closed process before selling also qualify for a VAT reduction for coal extracted and sold.

In cases where goods and services listed in Appendices 1, 2, and 3 attached to Decree 180/2024/ND-CP fall under non-VAT or 5% VAT as per the Law on Value Added Tax 2008, the law's stipulations shall be followed without any VAT reduction.

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

(2) Rate of VAT reduction:

- Business establishments calculating VAT by the deduction method shall apply a VAT rate of 8% for goods and services stipulated in (1)

- Business establishments (including business households and individuals) calculating VAT based on a percentage of revenue shall have a 20% reduction in the percentage for calculating VAT on invoices issued for goods and services subject to VAT reduction as specified in (1).

Which types of goods and services are eligible for a VAT reduction in Vietnam in the first half of 2025? (Image from the Internet)

How long does the VAT reduction period last in Vietnam?

Based on Article 2 of Decree 180/2024/ND-CP, the regulation on the effective period is as follows:

Effective period and implementation

1. This Decree takes effect from January 1, 2025, until the end of June 30, 2025.

2. The Ministries in accordance with their functions, duties, and the People's Committees of provinces and centrally-run cities direct relevant agencies to deploy, publicize, guide, inspect, and supervise so that consumers understand and benefit from the VAT reduction outlined in Article 1 of this Decree, focusing on solutions to maintain stability in the supply and demand of goods and services subject to VAT reduction to keep market prices (excluding VAT) stable from January 1, 2025, to June 30, 2025.

3. During implementation, any arising issues will be addressed and resolved under the guidance of the Ministry of Finance.

4. Ministries, heads of ministerial-level agencies, heads of agencies under the Government of Vietnam, Chairpersons of People's Committees of provinces and centrally-run cities, and related enterprises, organizations, and individuals are responsible for implementing this Decree.

Therefore, the 2% VAT reduction period in 2025 is from January 1, 2025, to the end of June 30, 2025.

What is the penalty for late filing of VAT returns in Vietnam?

According to Article 13 of Decree 125/2020/ND-CP, penalties for late submission of VAT returns are prescribed as follows:

(1) A warning is imposed for late submission of VAT returns from 1 to 5 days if there are mitigating circumstances.

(2) A fine of 2,000,000 VND to 5,000,000 VND is imposed for late submission of VAT returns from 1 to 30 days, except as specified in Clause 1, Article 13 of Decree 125/2020/ND-CP

(3) A fine of 5,000,000 VND to 8,000,000 VND is imposed for late submission of VAT returns from 31 to 60 days.

(4) A fine of 8,000,000 VND to 15,000,000 VND is imposed for any of the following violations:

- Late submission of VAT returns from 61 to 90 days;

- Late submission of VAT returns for over 91 days without arising tax obligations;

- Non-submission of VAT returns without arising tax obligations;

(5) A fine of 15,000,000 VND to 25,000,000 VND is imposed for late submission of VAT returns over 90 days from the tax filing deadline, with tax obligations arising, provided the tax payer has fully paid the tax amount and late payment to the state budget before the tax authority announces the tax inspection or audit decision or before the tax authority records the delay in tax return submission per Clause 11, Article 143 of Tax Administration Law 2019.

If the fine calculated under this clause exceeds the tax amount arising in the tax return, the maximum fine shall be equivalent to the tax amount due in the tax return but not less than the average fine within the monetary penalty frame specified in Clause 4, Article 13 of Decree 125/2020/ND-CP

In addition, individuals committing such violations must undertake remedial measures:

- Compulsorily pay the full overdue tax amount into the state budget for violations specified in Clauses 1, 2, 3, 4, and 5, Article 13 of Decree 125/2020/ND-CP when delayed VAT filing leads to overdue tax payment;

- Required to submit tax returns and accompanying appendices for violations mentioned in Points c and d, Clause 4, Article 13 of Decree 125/2020/ND-CP

Note: The above penalties for late VAT return submission apply to organizational violations. For individuals with similar violations, the fine is half the amount imposed on organizations (as per Clause 5, Article 5 of Decree 125/2020/ND-CP).