How long is the 2% VAT reduction period? Is there a Decree on VAT reduction in 2024? How to calculate the VAT rates in Vietnam in 2024?
How long is the 2% VAT reduction period in Vietnam?
On November 29, 2023, the National Assembly approved Resolution 110/2023/QH15 on the 6th Session of the 15th National Assembly.
Accordingly, the National Assembly resolved the VAT reduction policy in 2024 as follows:
VAT on goods and services specified in Point a Section 1.1 Clause 1 Article 3 of the National Assembly’s Resolution No. 43/2022/QH15 on fiscal and monetary policies for supporting socio-economic recovery and development program is reduced by 2% from January 01, 2024 to June 30, 2024 inclusively.
Thus, the VAT reduction policy in 2024 at point a, section 1.1, clause 1, Article 3 of Resolution 43/2022/QH15 is as follows:
- Reduce 2% of VAT in 2022 for goods and services currently subject to 10% VAT (to 8%) from January 1, 2024 to June 30, 2024.
- From July 1, 2024: Return to the previous tax rate in case there is no executive document to continue tax reduction.
How long is the 2% VAT reduction period? Is there a Decree on VAT reduction in 2024? How to calculate the VAT rates in Vietnam in 2024?
Vietnam: Is there a Decree on VAT reduction in 2024?
At the 6th Session of the 15th National Assembly, the National Assembly approved Resolution 110/2023/QH15 on the 6th Session of the 15th National Assembly, which includes a 2% VAT reduction for the first half of 2024.
Accordingly, the National Assembly assigned the Government to organize the implementation and submit report on implementation results to the National Assembly in the 7th meeting of the 15th National Assembly.
After that, the Ministry of Finance developed a draft Decree stipulating the 2% VAT reduction policy.
Accordingly, the content of the Draft Decree on VAT Reduction stipulates a 2% reduction in the value-added tax rate applicable to groups of goods and services currently subject to 10% VAT.
VAT reduction shall not apply to some of the following groups of goods and services:
- telecommunication, information technology
- financial activities, banking activities, securities, insurance,
- trading of real estate,
- metal, precast metal products, mining products (excluding coal mining),
- coke mining, refined oil,
- chemical products,
- goods and services subject to excise tax;
The VAT reduction period is from January 1, 2024 to June 30, 2024. (i.e. first 6 months of 2024)
Basically, the content of the Draft Decree stipulates a 2% VAT reduction based on the inheritance of the contents specified in Decree 44/2023/ND-CP.
How to calculate the VAT rates in Vietnam in 2024?
Based on the Resolution of the 6th Session of the 15th National Assembly, the Law on Value Added Tax 2008, Decree 44/2023/ND-CP, the 2024 VAT rate will have the following VAT rates:
(1) 0% VAT:
Pursuant to the provisions of Clause 1, Article 8 of the Law on Value Added Tax 2008 (amended by Clause 3, Article 1 of the Law on amendments to the Law on value-added tax 2013; Clause 2, Article 1 of the 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 2016) stipulates a tax rate of 0% accordingly:
The tax rate of 0% applies to exported goods and services, international transportation and goods and services not liable to value-added tax specified in Article 5 of the Law on Value Added Tax 2008 upon exportation, except cases of:
- transfer of technologies or intellectual property rights abroad;
- offshore reinsurance services;
- credit provision, capital transfer and derivative financial services;
- post and telecommunications services;
- exported products being resources or minerals that are no processed into other products according to Clause 23 Article 5 of this Law.
Exported goods and services being sold outside Vietnam, in non-tariff zones; goods and services provided for foreigners according to the Government’s regulations.
(2) 5% VAT:
Pursuant to the provisions of Clause 2, Article 8 of the Law on Value Added Tax 2008 (supplemented by Clause 3, Article 1 of the Law on amendments to the Law on value-added tax 2013; Points b, c, and k of this Clause are respectively amended and annulled by Clauses 2 and 3, Article 3 of the Law on Amendments to Tax Laws 2014) stipulates 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.
- Sale, lease, and hire purchase of social housing according to the Law on Housing
(3) 10% VAT and 8% VAT:
According to Resolution 44/2023/ND-CP, Resolution 43/2022/QH15 and Resolution 101/2023/QH15, the tax rate of 8% applies to groups of goods and services currently applying 10%, except for some groups of goods as prescribed in Clause 1, Article 1 of Resolution 44/2023/ND-CP.
Pursuant to the provisions of Clause 3, Article 8 of the Law on Value Added Tax 2008, the 10% VAT rate is applied to goods and services that do not apply the 0% and 5% tax rates and the 8% group.
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