Continue to reduce 2% VAT in the first 6 months of 2025 in Vietnam according to Resolution 174/2024/QH15

Continue to reduce 2% VAT in the first 6 months of 2025 in Vietnam according to Resolution 174/2024/QH15

The National Assembly of Vietnam has passed Resolution 174/2024/QH15 dated November 30, 2024. In Resolution 174/2024/QH15, there is mention of the 2% VAT reduction in the first 6 months of 2025 in Vietnam as follows:

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7. The Government of Vietnam is assigned to summarize and report at the 10th Session, National Assembly Session XV, on the results of implementing Resolutions 120/2020/QH14, 24/2021/QH15, 25/2021/QH15, and related resolutions of the National Assembly regarding national target programs, and propose plans for the 2026 - 2030 period. The extension of the implementation and disbursement period of national target program funds for 2024 (including funds from 2022 and 2023 carried over to 2024) is allowed until December 31, 2025.

8. To continue the 2% reduction in the VAT rate for groups of goods and services specified at point a of section 1.1, clause 1, Article 3 of Resolution 43/2022/QH15 of the National Assembly concerning fiscal and monetary policies supporting the Economic-Social Recovery and Development Program from January 1, 2025, to June 30, 2025. The Government of Vietnam is tasked with organizing implementation, ensuring revenue tasks, and balancing the state budget for 2025 as decided by the National Assembly; to immediately terminate the VAT exemption regulation in Decision 78/2010/QD-TTg by the Prime Minister of the Government of Vietnam, providing a legal basis and management sanctions for the taxation of foreign e-commerce platforms selling goods in Vietnam.

9. To continue implementing the investment policy of the Ninh Thuan Nuclear Power Plant Project as per The Government's Proposal No. 811/TTr-CP dated November 25, 2024. The Government of Vietnam is tasked with urgently directing the allocation of resources for implementation according to the conclusions of authorized entities; studying amendments and supplements to related laws, including the Atomic Energy Law.

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As such, according to the above regulations, a 2% VAT reduction will continue in the first 6 months of 2025 (from January 1, 2025, to June 30, 2025) for groups of goods and services currently applying a 10% VAT rate (reduced to 8%), except for certain groups of goods and services including:

- Telecommunications, information technology;

- Financial, banking, securities, insurance activities;

- Real estate business;

- Metals, products from fabricated metals, mining products (excluding coal mining), coke, refined petroleum, chemical products, goods products;

- Services subject to excise tax.

Who will pay VAT from July 1, 2025 in Vietnam?

According to Article 4 VAT Law 2024 (effective from July 1, 2025) regarding taxpayers:

(1) Organizations, households, and individuals producing and trading goods and services subject to VAT (hereinafter referred to as business establishments).

(2) Organizations and individuals importing goods subject to VAT (hereinafter referred to as importers).

(3) Organizations and individuals conducting business in Vietnam purchasing services (including services associated with goods) from foreign organizations without permanent establishments in Vietnam, individuals outside Vietnam as non-residents in Vietnam, except for cases specified in clauses 4 and 5, Article 4 VAT Law 2024; organizations conducting business in Vietnam purchasing goods and services for oil and gas exploration and development activities of foreign organizations without permanent establishments in Vietnam, individuals outside Vietnam as non-residents in Vietnam.

(4) Foreign suppliers without permanent establishments in Vietnam conducting e-commerce or platform-based business with organizations and individuals in Vietnam (hereinafter referred to as foreign suppliers); organizations managing foreign digital platforms to deduct and pay tax obligations on behalf of foreign suppliers; organizations conducting business in Vietnam applying the VAT calculation method as the credit method purchasing services from foreign suppliers without permanent establishments in Vietnam through e-commerce channels or platforms to implement deduction, paying tax obligations on behalf of foreign suppliers.

(5) Organizations managing e-commerce platforms, platform operators with payment functions implementing tax withholding, paying tax on behalf, and declaring the deducted tax for business households and individuals on the e-commerce platform, digital platform.

(6) The Government of Vietnam specifies details regarding clauses 1, 4, and 5 of Article 4 VAT Law 2024; stipulates taxpayers in cases where foreign suppliers provide services to purchasers being business organizations in Vietnam applying the tax deduction method specified in clause 4 of Article 4 VAT Law 2024.

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