Will the value added tax rate of 8% continue to be applied in Vietnam in 2023? How much is VAT in 2023?
How much is the value added tax rate in Vietnam in 2022?
According to the provisions of Article 8 of the 2008 Law on Value-Added Tax of Vietnam (amended by Clause 3, Article 1 of the 2013 Law on amendments to the Law on Value-Added Tax, Clauses 2 and 3, Article 3 of the 2014 Law on amendments to the Tax Laws and Clause 2 Article 1 of the 2016 Law on amendments to some articles of the Law on Value-added tax, the Law on Special excise duty, and the Law on Tax Administration and Clause 1, Article 1 of Decree 15/2022/ND-CP, the current value-added tax rate is specified as follows:
- The tax rate of 0% is applicable to exported goods and services, international transport, goods and services that are not subject to VAT according to Article 5 of this Law when they are exported, except for the cases below:
+ Transferring technologies, transferring intellectual property rights abroad;
+ Reinsurance abroad;
+ Credit services;
+ Capital transfer;
+ Derivative financial services;
+ Telecommunications and postal services;
+ The exports specified in Clause 23 Article 5 of this Law.
Exported goods/services that are consumed outside Vietnam, within free trade zones; goods/services provided for foreign customers as prescribed by the Government.
- The tax rate of 5% applies to the following goods and services:
+ Clean water for production and daily life;
+ Ores for production of fertilizers; pesticides, and growth stimulants for animals, plants;
+ Services of digging, embanking and dredging canals, ditches, ponds and lakes for agricultural production; growing, tending, and preventing pests and insects for, plants; preliminary processing and preservation of agricultural products;
+ Unprocessed cultivation, husbandry and fishery products, except products specified in Clause 1, Article 5 of this Law;
+ Preliminarily processed rubber latex; preliminarily processed turpentine; nets, main ropes and fibers for making fishing-nets;
+ Fresh and live food; unprocessed forest products, except timber, bamboo shoots and products specified in Clause 1, Article 5 of this Law;
+ Sugar; by-products in sugar production, including molasses, bagasse and sludge;
+ Products made of jute, rush, bamboo, leaf, straw, coconut husks and shells and Eichhornia crassipes, and other handicrafts made of agricultural raw materials; preliminarily processed cotton; paper for newspaper printing;
+ Special-purpose machinery and equipment for agricultural production, including ploughing machines, harrowing machines, rice-planting machines, seeding machines, rice-plucking machines, reaping machines, combine harvesters, agricultural product harvesters, insecticide or pesticide pumps or sprayers;
+ Teaching and learning aids, including models, figures, boards, chalk, rulers, compasses, and equipment and tools exclusively used for teaching, research and scientific experiments;
+ Cultural, exhibition, physical training and sports activities; art performances; film production; film import, distribution and screening;
+ Children toys; books of all kinds, except books specified in Clause 15, Article 5 of this Law;
+ Scientific and technological services under the Law on Science and Technology.
- The tax rate of 10% applies to goods and services not listed in Clauses 1 and 2 of this Article.
- The tax rate of 8% applies to goods and services specified in Clause 1 Article 1 of Decree 15/2022/ND-CP.
Will the value added tax rate of 8% continue to be applied in Vietnam in 2023? How much is VAT in 2023?
How much is the expected value added tax rate in Vietnam in 2023?
Currently, a number of goods and services that are applying the value-added tax rate of 10% shall be subject to tax reduction according to the provisions of Clause 1, Article 1 of Decree 15/2022/ND-CP of Vietnam as follows:
VAT on goods and services currently subject to 10% VAT shall be reduced, except the following goods and services:
- Telecommunication, financial activities, banking activities, securities, insurance, trading of real estate, metal and precast metal products, mining products (excluding coal mining), coke mining, refined oil, chemical products. Further details are provided in Appendix I enclosed herewith.
- Goods and services subject to excise tax. Further details are provided in Appendix II enclosed herewith.
- Information technology as prescribed in the Law on information technology. Further details are provided in Appendix III enclosed herewith.
- Reduction of VAT for each type of goods and services specified in Clause 1 of this Article shall be applied consistently in all stages, including import, production, processing and trading. Coal mined for sale (including coal mined and then washed, sieved and classified under a closed process) shall be eligible for VAT reduction. VAT on coal products in Appendix I enclosed herewith in stages other than the stage of mining and sale shall not be reduced.
In case goods and services in Appendixes I, II and III enclosed herewith are not subject to VAT or are subject to 5% VAT in accordance with the Law on value-added tax, regulations of the Law on value-added tax shall prevail and VAT on such goods and services shall not be reduced.
The tax rates applied according to Clause 2, Article 1 of Decree 15/2022/ND-CP of Vietnam:
VAT reduction
…
2. VAT reduction rates
a) Business establishments that pay VAT using the credit-invoice method shall pay 8% VAT on the goods and services specified in Clause 1 of this Article.
b) Business establishments (including household businesses and individual businesses) that pay VAT using the direct method (as a percentage (%) of revenue) shall be eligible for 20% reduction in the percentage (%) used as the basis for calculating VAT when issuing invoices for the goods and services eligible for VAT reduction specified in Clause 1 of this Article.
However, in Clause 1, Article 3 of Decree 15/2022/ND-CP of Vietnam, this value-added tax rate of 8% is only applicable until the end of December 31, 2022.
Effect and implementation
1. This Decree comes into force from February 01, 2022.
The provisions in Article 1 of this Decree shall take effect from February 01, 2022 to December 31, 2022 inclusively.
Thus, from January 1, 2023, the value-added tax rate is expected to return to normal until the Government makes a decision to extend the reduction of value-added tax. According to that, the expected value-added tax rate in 2023 includes:
- The tax rate of 0% applies to exported goods and services, international transportation and goods and services not subject to value-added tax specified in Article 5 of this Law upon export, except for the following cases: The case is not applicable in Clause 3, Article 1 of the 2013 Law on Value-Added Tax.
- The tax rate of 5% applies to goods and services specified in Clause 2, Article 8 of the 2008 Law on Value-Added Tax (amended and supplemented by Clause 3, Article 1 of the 2013 Law on amendments to the Law on Value-Added Tax, Clause 2, Article 3 of the 2014 Law amending Tax Laws)
- The tax rate of 10% applies to goods and services that are not subject to the tax rate of 0% and tax rate of 5%.
What are the regulations on value added tax invoices?
According to the provisions of Article 14 of the 2008 Law on Value-Added Tax of Vietnam on invoices and documents when applying value added tax as follows:
Goods and service purchase and sale must be accompanied by invoices and documents according to law and the following regulations:
- Business establishments which pay value-added tax according to the tax credit method shall use added-value invoices; such an invoice must be filled in fully and properly, displaying all surcharges and additional charges (if any). In case value-added tax-subject goods or services are sold with added-value invoices that do not indicate value-added tax amounts, the output value-added tax shall be determined to be the payment price indicated in the invoice multiplied by the value-added tax rate, except cases specified in Clause 2 of this Article;
- Business establishments which pay tax according to the method of calculation of tax based directly on added value shall use sale invoices.
For stamps and tickets which are payment documents pre-printed with payment prices, those prices are inclusive of value-added tax.
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