Which Goods Are Subject to VAT Reduction in 2024? Until When Is the VAT Reduction for 2024 Applicable?
Which Goods Are Eligible for VAT Reduction in 2024?
On December 28, 2023, the Government of Vietnam promulgated Decree 94/2023/ND-CP stipulating the VAT reduction policy according to Resolution No. 110/2023/QH15 dated November 29, 2023, of the National Assembly.
Article 1 of Decree 94/2023/ND-CP outlines the goods eligible for VAT reduction in 2024, including:
- Reduction of VAT for groups of goods and services currently subject to a 10% tax rate, excluding the following groups of goods and services:
+ Telecommunications, financial and banking activities, securities, insurance, real estate business, metals and pre-fabricated metal products, mining products (excluding coal mining), coke, refined petroleum, chemical products. Details are specified in Appendix I issued together with this Decree.
+ Goods and services subject to special consumption tax. Details are specified in Appendix II issued together with Decree 94/2023/ND-CP.
+ Information technology products and services according to the Law on Information Technology. Details are specified in Appendix III issued together with Decree 94/2023/ND-CP.
+ The reduction of VAT for each type of goods and services specified in Clause 1, Article 1 of Decree 94/2023/ND-CP is uniformly applied at the stages of importation, production, processing, and commercial business. For coal products extracted and sold (including cases where coal is extracted and then screened and classified in a closed process before being sold), they are subject to VAT reduction. Coal products listed in Appendix I issued with this Decree, at stages other than extraction and sale, are not eligible for VAT reduction.
Corporations and economic groups that conduct a closed process before selling out are also eligible for VAT reduction for extracted coal products.
In cases where goods and services listed in Appendices I, II, and III issued with Decree 94/2023/ND-CP are not subject to VAT or subject to a 5% VAT rate according to the Law on Value-Added Tax, the VAT reduction is not applicable.
Clause 2 of Article 1 in Decree 94/2023/ND-CP stipulates the levels of VAT reduction as follows:
- Business establishments calculating VAT by the credit method shall apply an 8% VAT rate for goods and services stipulated in Clause 1, Article 1 of Decree 94/2023/ND-CP.
- Business establishments (including business households and individual businesses) calculating VAT by a percentage method on revenue are reduced by 20% of the percentage rate for calculating VAT when issuing invoices for goods and services eligible for VAT reduction specified in Clause 1, Article 1 of Decree 94/2023/ND-CP.
Which goods are eligible for VAT reduction in 2024? What is the duration of the VAT reduction in 2024?
What are the Procedures for Implementing VAT Reduction?
Clause 3, Article 1 of Decree 94/2023/ND-CP provides guidelines on the procedures for implementing VAT reduction as follows:
- For business establishments specified in Point a, Clause 2, Article 1 of Decree 94/2023/ND-CP, when issuing VAT invoices for goods and services eligible for VAT reduction, they should record "8%" in the VAT rate line; VAT amount; and the total amount payable by the buyer. Based on the VAT invoice, the seller shall declare the reduced output VAT, and the buyer shall declare the reduced input VAT according to the reduced tax amount stated on the VAT invoice.
- For business establishments specified in Point b, Clause 2, Article 1 of Decree 94/2023/ND-CP, when issuing sales invoices for goods and services eligible for VAT reduction, they should record the full amount for goods and services in the "Amount" column before reduction, and for "Total amount for goods and services," they should record the reduced amount by 20% of the percentage rate on revenue, with a note: "reduced by... (amount) equivalent to 20% of the percentage rate for calculating VAT according to Resolution 110/2023/QH15."
What is the Duration of the VAT Reduction in 2024?
Article 2 of Decree 94/2023/ND-CP stipulates the enforcement of Decree 94/2023/ND-CP as follows:
Effective Date and Implementation
- This Decree is effective from January 1, 2024, to June 30, 2024.
- Ministries by their functions, duties, and provincial People’s Committees shall direct relevant agencies to disseminate, guide, inspect, and monitor to ensure consumers understand and benefit from the VAT reduction stipulated in Article 1 of this Decree, focusing on measures to stabilize the supply and demand of goods and services subject to VAT reduction to maintain market stability (pre-tax price) from January 1, 2024, to June 30, 2024.
- During the implementation process, if any issues arise, the Ministry of Finance is authorized to provide guidance and resolve them.
- Ministers, Heads of equivalent agencies, Heads of agencies under the Government, Chairpersons of provincial People’s Committees, and relevant enterprises, organizations, and individuals are responsible for implementing this Decree.
Thus, under the above regulations, the duration for the VAT reduction in 2024 ends on June 30, 2024.
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