Vietnam: What are the notable new contents in Decree 44/2023/ND-CP on VAT reduction in 2023 compared to Decree 15/2022/ND-CP?
- In 2023, what are the goods not eligible for VAT reduction in Vietnam?
- In 2023, what are the VAT reduction rates in Vietnam?
- What is the duration for applying VAT reduction in 2023 in Vietnam?
- What are the amendments to the regulations on issuing and handling VAT invoices during the tax reduction period in Vietnam?
- Have the regulations on invoices with pre-printed face values and deductible expenses when determining taxable income in Vietnam been removed under Decree 44/2023/ND-CP?
In 2023, what are the goods not eligible for VAT reduction in Vietnam?
In Clause 1, Article 1 of Decree 44/2023/ND-CP on applying VAT reduction for goods and services subject to the VAT rate of 10%.
VAT on goods and services that are currently subject to the VAT rate of 10% shall be reduced, except for 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, and chemical products.
+ Goods and services subject to excise tax such as cigarette, cigar, spirit; beer; motor vehicles for transport of fewer than 24 people, motorbikes, three-wheel motorcycles with a cylinder capacity of over 125cm3; aircraft, yachts; gasoline of all kinds;...
+ Information technology products and services as prescribed in the Law on information technology such as sound cards or video cards, network and similar cards of a kind used for automatic data processing machines; smart cards; computers and peripherals;...
VAT on goods and services shall be reduced consistently at all stages, including import, production, processing, and trading.
In case any of the goods and services are not subject to VAT or is subject to 5% VAT in accordance with the Law on value-added tax, VAT on that good or service shall be paid in accordance with the Law on value-added tax and shall not be reduced.
Thus, compared with Decree 15/2022/ND-CP, 2023, the scope of application of the VAT reduction policy does not vary.
However, in the notes at the end of the List of goods and services in Appendix I and Appendix III, HS codes in column (10) are used for searching purposes. The determination of HS codes of actually imported goods shall comply with regulations on goods classification laid down in the Law on Customs and its instructional documents.
In addition, in the Appendix on goods not eligible for VAT reduction, some HS codes have been modified:
In Appendix I:
- Modify HS codes of insecticides
- Add HS codes of other pesticides and chemical products used in agriculture.
- Modify HS codes of organic surface-active agents other than soap.
- Modify HS codes of Unwrought copper or copper alloys, copper mattes, cement copper (precipitated copper)
- Modify HS codes of Reservoirs, tanks and similar container, of metals
- Modify HS codes of Parts of bombs, mines, grenades, torpedoes, missiles, munitions
- Modify HS codes of Parts and accessories of military weapons, revolvers, pistols, firearms and other arms
- Springs and leaves for springs, of steel or copper
- Chain (other than articulated link chain) and parts thereof, of steel or copper
In Appendix III:
- Modify HS code of Television cameras
- Modify HS code of Cellular telephones of the common kind
- Modify HS code of Smartphones
- Add HS code of smartwatch
- Modify HS codes of Aerials of all kinds and parts thereof; parts of transmission apparatus for radio-broadcasting or television, and television cameras
- Modify HS code of Radio-broadcast receivers, operating only with an external source of power, of a kind used in motor vehicles
- Modify HS code of accounting machines
- Modify HS code of LED lights
See details of goods not eligible for VAT reduction in 2023 here
>> Download all VAT reduction appendices 2023 Decree 44/2023
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In 2023, what are the VAT reduction rates in Vietnam?
As agreed at the XV National Assembly Session, the VAT reduction in 2023 is specifically guided in Clause 2 Article 1 of Decree 44/2023/ND-CP as follows:
- Business establishments that pay VAT using the credit-invoice method shall pay 8% VAT on goods and services other than goods and services not eligible for VAT reduction.
- Business establishments (including household businesses and individual businesses) that pay VAT using the direct method (as a percentage (%) on revenue) shall be eligible for 20% reduction in the rate (%) used as the basis for calculating VAT when issuing invoices for the above goods and services eligible for VAT reduction.
Thus, in 2023, the VAT reduction rates in Vietnam will be similar to Decree 15/2022/ND-CP.
What is the duration for applying VAT reduction in 2023 in Vietnam?
Pursuant to Article 2 of Decree 44/2023/ND-CP, the VAT reduction policy is applied from July 01, 2023 to December 31, 2023.
In 2022, VAT reduction was applied from February 01, 2023 to December 31, 2022. Thus, compared with 2022, the VAT reduction in 2023 is only in the second half of the year (from July 01, 2023, to December 31, 2023).
What are the amendments to the regulations on issuing and handling VAT invoices during the tax reduction period in Vietnam?
In this regard, Clause 3 Article 1 of Decree 44/2023/ND-CP on the procedures for VAT reduction when issuing invoices as follows:
(1) For business establishments that pay VAT using the credit-invoice method:
- When issuing VAT invoices for goods and services eligible for VAT reduction, the business establishments that pay VAT using the credit-invoice method shall write “8%” on the “VAT rate” line, VAT amount payable, and total amount payable by the buyer on the issued invoice.
The good seller or service provider shall declare output VAT and the good buyer or service user shall declare and deduct input VAT according to the VAT amount written on the VAT invoice.
If a business establishment that pays VAT using the credit-invoice method sells or provides goods or services subject to different tax rates, the tax rate on each good or service must be written on its issued VAT invoice.
(2) For business establishments (including household businesses and individual businesses) that pay VAT using the direct method (as a percentage (%) on revenue):
- When issuing sales invoices for goods and services eligible for VAT reduction, the business establishments (including household businesses and individual businesses) that pay VAT using the direct method (as a percentage (%) on revenue) shall write the full amount of the good or service before the reduction in the "Thành tiền" ("Amount") column, the amount payable after reduction (by 20% of the rate (%) on revenue) on the “Cộng tiền hàng hóa, dịch vụ” ("Total amount") line, and the note “đã giảm... (số tiền) tương ứng 20% mức tỷ lệ % để tính thuế giá trị gia tăng theo Nghị quyết số 101/2023/QH15” ("an amount of......., equivalent to 20% of the rate (%) used as the basis for calculating VAT, is reduced according to the Resolution No. 101/2023/QH15”) on the issued invoice.
When a business establishment (including household businesses and individual businesses) that pay VAT using the direct method (as a percentage (%) on revenue) sells goods or provides services, the reduced amount must be written on its issued sales invoice as prescribed in Clause 3 of this Article.
Note:
In case an invoice indicating the VAT rate or the rate (%) used as the basis for calculating VAT is not yet reduced, the seller and buyer make a record/have a written agreement stating the error; The seller makes an adjusted invoice and deliveries it to the buyer.
Previously, in Decree 15/2022/ND-CP, the seller and buyer made a record and agreement clearly stating the error, and the seller makes an adjusted invoice and deliveries it to the buyer.
Trong khi tại Nghị định 44/2023/NĐ-CP, the invoice shall be corrected by the seller and the buyer in accordance with regulations of law on invoices and records. Compared with the provisions at Point b, Clause 2, Article 19 of Decree 123/2020/ND-CP, the seller and the buyer agree on one of two forms:
- Issue an invoice to correct or replace the erroneous one.
Have the regulations on invoices with pre-printed face values and deductible expenses when determining taxable income in Vietnam been removed under Decree 44/2023/ND-CP?
Previously, in Clause 6, Article 1 of Decree 15/2022/ND-CP:
6. In case a seller or provider of goods or services that are eligible for VAT reduction has issued invoices in the form of tickets with the printed prices, and wishes to keep using these invoices, they shall stamp the reduced prices (by 2% of the tax rate or by 20% of the percentage (%) of revenue) beside the pre-printed prices.
Thus, under Decree 44/2023/ND-CP, the regulations on invoices with pre-printed face values have been removed.
In addition, Decree 44/2023/ND-CP also removed the regulations on deductible expenses when determining taxable income in Article 2 of Decree 15/2022/ND-CP.
See the full Decree 44/2023/ND-CP here
>>> How to determine goods not eligible for VAT reduction?
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