Vietnam: What should be paid attentions to when the VAT is reduced in 2023? When will the VAT reduction apply?
Vietnam: What should be paid attentions to when the VAT is reduced in 2023?
Based on Decree 44/2023/ND-CP, the contents of VAT reduction in Vietnam from 10% to 8% from July 1, 2023 to December 31, 2023 to be noted are as follows:
(1) VAT reduction to calculate VAT as a percentage of revenue according to Decree 44/2023/ND-CP
Business establishments (including business households and individual businesses) that calculate VAT according to the percentage method on revenue are entitled to a 20% reduction in the percentage rate to calculate VAT when issuing invoices for goods. Goods and services are subject to VAT reduction according to the above regulations.
(2) Prepare 8% VAT invoice according to Decree 44/2023/ND-CP:
- In case a business establishment calculates VAT using the deduction method when selling goods or providing services with different tax rates, the VAT invoice must clearly state the tax rate of each good and service according to the tax rate. prescribed in Clause 3, Article 1 of Decree 44/2023/ND-CP
- In case a business establishment (including business households and individual businesses) calculates VAT according to the percentage method on revenue when selling goods or providing services, the sales invoice must clearly state it. The amount is reduced according to the provisions of Clause 3, Article 1 of Decree 44/2023/ND-CP.
In case the business establishment has issued an invoice and declared the tax rate or percentage to calculate VAT that has not been reduced according to the provisions of Decree 44/2023/ND-CP, the seller and buyer will handle the transaction. Manage invoices made according to legal regulations on invoices and documents. Based on the invoice after processing, the seller declares output tax adjustments, and the buyer declares input tax adjustments (if any).
Business establishments must declare goods and services eligible for VAT reduction according to Form No. 01 in Appendix IV issued with Decree 44/2023/ND-CP along with the VAT declaration.
(3) Declare goods with 2% VAT reduction according to Decree 44/2023/ND-CP:
Business establishments declare goods and services eligible for VAT reduction. Form to declare goods and services eligible for VAT reduction is Form No. 01 in Appendix IV issued with Decree 44/2023/ND -CP together with the VAT Declaration.
(4) The General Department of Customs guides on declaring the 8% VAT rate on the VNACCS/VCIS system:
Pursuant to Official Dispatch 3431/TCHQ-TXNK of 2023 on implementing Decree 44/2023/ND-CP on VAT reduction in Vietnam according to Resolution 101/2023/QH15, the General Department of Customs guides the declaration of VAT rates 8 % on VNACCS/VCIS system as follows:
Request provincial and city Customs Departments to guide customs declarants:
- Choose the correct code VB205 to declare the 8% VAT rate.
Code VB205 does not apply to the following cases: subject not subject to VAT, subject to VAT subject to VAT rates of 0%, 5% and 10% (as prescribed in the Law on Value Added Tax) .
- The VAT reduction rate from 10% to 8%, declaration code VB205 only applies to customs declarations registered from 0:00 a.m. on July 1, 2023 (corresponding to the information criteria posted on the date of posting). signed on the face of the customs declaration).
In case the customs declaration is registered before 0:00 a.m. on July 1, 2023 (with the registration date information on the customs declaration being less than 00:00 a.m. on July 1, 2023), this is not applicable. VAT rate 8% (declare code VB205).
Vietnam: What should be paid attentions to when the VAT is reduced in 2023? When will the VAT reduction apply?
Vietnam: When will the VAT reduction apply?
Pursuant to Article 2 of Decree 44/2023/ND-CP stipulating the effect and implementation organization as follows:
- This Decree takes effect from July 01, 2023 to December 31, 2023 inclusively.
- Ministries, within the ambit of their assigned functions and tasks, and Provincial People’s Committees shall direct relevant agencies to disseminate, instruct and inspect the implementation of regulations on VAT reduction in Article 1 of this Decree, especially solutions for stabilizing supply and demand for goods and services eligible for VAT reduction so as to ensure stable market prices of goods and services (prices exclusive of VAT) for the period from July 01, 2023 to December 31, 2023 inclusively.
- Difficulties that arise during the implementation of this Decree should be reported to the Ministry of Finance of Vietnam for consideration.
- Ministers, heads of ministerial agencies, heads of Governmental agencies, Chairpersons of Provincial People’s Committees and relevant enterprises, organizations and individuals are responsible for the implementation of this Decree.
Thus, the 8% VAT reduction policy for goods and services according to the provisions of Decree 44/2023/ND-CP will apply from July 1, 2023 to December 31, 2023.
Which goods and services are subject to VAT reduction in Vietnam?
Pursuant to Article 1 of Decree 44/2023/ND-CP, VAT on goods and services that are 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 products and services as prescribed in the Law on information technology. Further details are provided in Appendix III enclosed herewith.
- VAT on goods and services of a specific type prescribed in Clause 1 of this Article shall be reduced consistently at all stages, including import, production, processing and trading. Coal products mined for sale (including coal products mined and then washed, sieved and classified under a closed process before they are sold) are eligible for VAT reduction. Coal products in Appendix I enclosed herewith are not eligible for VAT reduction at any stages other than the mining stage.
Coal products produced under a closed process of economic corporations or groups shall be also eligible for VAT reduction.
In case any of the goods and services in Appendixes I, II and III enclosed herewith is 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.
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