2% VAT Reduction Until When? What Are the VAT Rates for 2024 Prescribed?
When will the 2% VAT reduction end?
On November 29, 2023, the National Assembly passed Resolution 110/2023/QH15 on the 6th Session of the 15th National Assembly.
The National Assembly resolved on the policy of reducing VAT for 2024 as follows:
Reduce the VAT rate by 2% for groups of goods and services stipulated in point a, section 1.1, clause 1, Article 3 of Resolution 43/2022/QH15 of the National Assembly on fiscal and monetary support for the Program on socio-economic recovery and development from January 1, 2024, to the end of June 30, 2024.
Thus, the VAT reduction policy for 2024 in point a, section 1.1, clause 1, Article 3 of Resolution 43/2022/QH15 is as follows:
- Reduce the VAT rate by 2% for certain goods and services that currently have a VAT rate of 10% from January 1, 2024, to the end of June 30, 2024.
- From July 1, 2024: Revert to the old VAT rate if there is no further decree continuing the tax reduction.
When will the 2% VAT reduction end? What are the VAT rates for 2024? (Image from the Internet)
What are the VAT rates for 2024?
Based on the Resolution of the 6th Session of the 15th National Assembly, Value Added Tax Law of 2008, Decree 94/2023/ND-CP, the VAT rates for 2024 will be as follows:
(1) VAT rate of 0%:
According to clause 1, Article 8 of the Value Added Tax Law of 2008 (amended by clause 3, Article 1 of the Law Amending Value Added Tax Law of 2013; clause 2, Article 1 of the Law on Amendments to the Laws on Taxation of 2016), which stipulates the 0% tax rate, as follows:
The 0% tax rate applies to exported goods and services, international transportation, and goods and services not subject to VAT under Article 5 of the Value Added Tax Law of 2008 when exported, except for the following cases:
- Technology transfer, intellectual property transfers abroad;- Reinsurance services provided abroad;- Credit granting services;- Capital transfer;- Derivative financial services;- Postal and telecommunications services;- Exported goods specified in clause 23, Article 5 of this Law.
Exported goods and services are those consumed outside Vietnam, in non-tariff areas; goods and services provided to foreign customers as per regulations of the Government of Vietnam.
(2) VAT rate of 5%:
According to clause 2, Article 8 of the Value Added Tax Law of 2008 (supplemented by clause 3, Article 1 of the Law Amending Value Added Tax Law of 2013; points b, c, k of this clause are respectively amended, repealed by clauses 2, 3, Article 3 of the Law on Amendments to the Laws on Taxation of 2014), which stipulates the 5% tax rate applies to the following goods and services:
- Clean water for production and daily life;- Ores for fertilizer production; pesticides and growth stimulants for animals and plants;- Services of digging, dredging canals, ditches, ponds, and lakes for agricultural production; cultivating, caring for, and protecting plants; preliminary processing and preservation of agricultural products;- Unprocessed agricultural, livestock, and aquatic products, except for those specified in clause 1, Article 5 of this Law;- Preliminary processed rubber latex; preliminary processed rosin; nets, ropes, and yarn for knitting fishing nets;- Fresh 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 mud;- Products made from jute, sedge, bamboo, rattan, leaves, straw, coconut shells, coconut webs, water hyacinth, and other handmade products made from agricultural by-products; preliminary processed cotton; newsprint;- Medical equipment and instruments, medical cotton, sanitary pads; medicines for disease prevention and treatment; pharmaceutical products, and medicinal herbs used for manufacturing medicines for disease treatment and prevention;- Educational equipment used for teaching and learning, including models, pictures, boards, chalk, rulers, compasses, and specialized teaching, research, and scientific experiment tools and equipment;- Cultural, exhibition, sports, and physical training activities; artistic performances, film production; import, distribution, and screening of films;- Children's toys; various types of books, except books specified in clause 15, Article 5 of this Law;- Scientific and technological services as stipulated by the Law on Science and Technology.
(3) VAT rates of 10% and 8%:
According to Decree 94/2023/ND-CP, the 8% tax rate applies to groups of goods and services currently subject to 10%, except for certain groups of goods specified in clause 1, Article 1 of Decree 94/2023/ND-CP.
According to clause 3, Article 8 of the Value Added Tax Law of 2008, the 10% VAT rate applies to goods and services not subjected to the 0%, 5%, and groups of 8%.
What is VAT?
According to Article 2 of the Value Added Tax Law of 2008, VAT is defined as follows:
Value Added Tax
Value Added Tax is the tax calculated on the added value of goods and services arising in the process from production, circulation, to consumption.
According to the definition, VAT is a tax that applies only to the added value and not to the entire value of goods and services.
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