Vietnam: Why is the VAT rate of 8% not applicable in 2023? In what cases are goods and services still subject to VAT of 8% in 2023?
In what cases are goods and services subject to the VAT rate of 8% in 2023?
Pursuant to Article 1 of Decree No. 15/2022/ND-CP and Article 3 of Decree No. 15/2022/ND-CP stipulating on subjects eligible for VAT reduction and application period as follows:
VAT reduction
1. VAT on goods and services currently subject to 10% VAT shall be reduced, except the following goods and services:
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2. VAT reduction rates
a) Business establishments that pay VAT using the credit-invoice method shall pay 8% VAT on the goods and services specified in Clause 1 of this Article.
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Effect and implementation
1. This Decree comes into force from February 01, 2022.
The provisions in Article 1 of this Decree shall take effect from February 01, 2022 to December 31, 2022 inclusively.
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Thus, the VAT reduction policy applies to goods and services currently subject to the 10% tax rate and 2% VAT reduction (ie 8% VAT rate applies).
The time for applying the above tax reduction is from February 1, 2022 to the end of December 31, 2022.
Pursuant to Article 8 of Circular No. 219/2013/TT-BTC stipulating the time for calculating VAT, VAT reduction goods and services will depend on the time for calculating VAT, specifically:
(1) For goods sale, VAT shall be calculated when the ownership or the right to use goods is transferred to the buyer, whether the payment is made or not.
Thus, if the seller of the goods transfers the ownership or the right to use the goods (subject to the application of the VAT rate of 8%) to the buyer in 2022, at this time, whether used or not paid until 2023, the VAT invoice for goods is still subject to the VAT rate of 8%.
(2) For service provision, VAT shall be calculated when service provision is completed or when the invoice for service provision is made, whether the payment is made or not.
In Clause 2, Article 9 of Decree No. 123/2020/ND-CP stipulating that invoices for provision of services shall be issued upon completion of the provision of services, whether the payment of the invoiced amount is made or not. In case a service is provided with payments collected in advanced or during the provision of that service, an invoice shall be issued when each payment is collected (excluding payments of deposited amounts or advance payments which are made to ensure the execution of contracts for provision of accounting, audit, financial consulting or taxation services; valuation services; technical survey and design services; supervision consulting services; investment construction project formulation services).
Thus, when the service provider is paid in advance in 2022 and issues an invoice at this time, the time for calculating VAT of service provision is 2022.
If the service is eligible for tax reduction policy in Decree No. 15/2022/ND-CP, even if the service provision and payment is completed in 2023, the service provider shall issue an invoice applicable to the 8% VAT rate.
(3) For imported goods, VAT shall be calculated when the customs declaration is registered.
At the same time, based on Article 25 of the 2014 Law on Customs stipulating the time limit for submission of customs documents, in case the time of registration of the customs declaration is before December 31, 2022 and the imported goods are subject to reduction tax, even if goods are imported in 2023, the VAT rate of 8% will still apply.
Vietnam: Why is the VAT rate of 8% not applicable in 2023? In what cases are goods and services still subject to VAT of 8% in 2023?
Why is the 8% VAT rate not applicable in 2023?
In the context of the world recession and difficulties caused by the epidemic, the National Assembly, with the spirit of accompanying the Government, had a comprehensive view, early and remotely decided to respond to a number of mechanisms and policies to solve the socio-economic, national defense and security situations and challenges that are being posed in the context of complicated developments of COVID-19.
On January 11, 2022, the National Assembly passed Resolution No. 43/2022/QH15 on fiscal and monetary policies to support the program of socio-economic recovery and development after the COVID-19 pandemic.
On January 28, 2021, the Government issued Decree No. 15/2022/ND-CP on tax exemption and reduction policies under Resolution No. 43/2022/QH15 on fiscal and monetary policies to support the Recovery and Recovery Program and social economic development.
Thus, Decree No. 15/2022/ND-CP stipulates a reduction of VAT to 8% for groups of goods and services currently subject to the 10% tax rate, except for some cases specified in Article 1 of Decree No. 15/2022/ND-CP.
However, in Article 3 of Resolution No. 43/2022/QH15 and Article 3 of Decree No. 15/2022/ND-CP also clearly state that the VAT reduction policy is only applicable and supported in 2022.
So far, the Government has not issued a new document on the policy of exempting or reducing the value-added tax rate for 2023.
Therefore, in 2023, the applicable VAT rate will comply with the previous provisions in the 2008 Law on Value Added Tax in Vietnam, guided by Decree No. 209/2013/ND-CP and Circular No. 219/2013/TT-BTC.
What is the VAT rate in 2023?
Pursuant to Article 8 of the 2008 Law on Value Added Tax in Vietnam, the VAT rate in 2023 includes 03 tax rates:
(1) Tax rate of 0%
(2) Tax rate of 5%
(3) Tax rate of 10%
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