List of goods subject to VAT reduction to 8% until July 1, 2024 in Vietnam

Hello Ms., Lawnet would like to answer as follows:

1. List of goods subject to VAT reduction to 8% until July 1, 2024 in Vietnam

On December 28, 2023, the Government of Vietnam issued Decree 94/2023/ND-CP stipulating the VAT reduction policy in accordance with Resolution 110/2023/QH15. It issues a list of goods with reduced VAT to 8% until July 1, 2024:

Businesses calculating VAT by the deduction method are subject to an 8% VAT rate for goods and services currently subject to a 10% rate, except for the following groups of goods and services:

- Telecommunications, financial activities, banking, securities, insurance, real estate business, metals and fabricated metal products, mining products (excluding coal mining), coke, refined petroleum, chemical products. Details in Appendix I issued with Decree 94/2023/ND-CP.

- Products and services subject to special consumption tax. Details in Appendix II issued with Decree 94/2023/ND-CP.

- Information technology in accordance with IT law. Details in Appendix III issued with Decree 94/2023/ND-CP.

- The VAT reduction for each type of goods and services specified in Clause 1, Article 1 of Decree 94/2023/ND-CP is applied uniformly at the import, production, processing, and commercial trading stages.

For extracted coal products sold (including cases where coal is extracted and then screened, classified through a closed process before being sold) that are eligible for VAT reduction. Coal products listed in Annex I issued with this Decree, at stages other than the extraction and sale stage, do not receive VAT reduction.

Companies and economic groups that implement a closed process and then sell are also eligible for VAT reduction for the extracted coal products sold.

In cases where goods and services specified in Appendices I, II, and III issued with Decree 94/2023/ND-CP are subject to non-VAT or subject to 5% VAT as per the Value Added Tax Law, they comply with the regulations of the Value Added Tax Law and do not receive VAT reduction.

At the same time, businesses (including business households, business individuals) calculating VAT by the percentage method on revenue receive a 20% reduction of the percentage rate used to calculate VAT when issuing invoices for goods and services subjected to VAT reduction specified in Clause 1, Article 1 of Decree 94/2023/ND-CP.

(According to Article 1 of Decree 94/2023/ND-CP)

Thus, from January 1, 2024, to July 1, 2024, the VAT reduction to 8% (from the previous 10%) for goods and services currently subject to a 10% rate is according to the above regulations, except for the goods and services listed in Appendices I, II, and III issued with Decree 94/2023/ND-CP that are not subject to VAT....

2. List of goods and services subject to a 5% VAT rate in Vietnam

According to the provisions of Clause 2, Article 8 of Value Added Tax Law 2008, Clause 3, Article 1 of amended Value Added Tax Law 2013, and Article 3 of amended Laws on Taxation 2014 regarding the 5% VAT rate applicable to the following goods and services:

- Clean water for production and living purposes;

- Ores for fertilizer production; pesticides and growth stimulants for animals and plants;

- Dredging, digging, and embanking of channels, ditches, ponds, and lakes for agricultural production; planting, nurturing, and protecting plants from pests; preliminary processing, preservation of agricultural products;

- Unprocessed agricultural, livestock, and aquatic products, except for products specified in Clause 1, Article 5 of Value Added Tax Law 2008;

- Preliminary processed rubber latex; preliminary processed pine resin; nets, net strings, and fibers for making fishing nets;

- Fresh food; unprocessed forest products, excluding wood, bamboo shoots, and products specified in Clause 1, Article 5 of Value Added Tax Law 2008;

- Sugar; by-products from sugar production, including molasses, bagasse, and mud;

- Products made from jute, sedge, bamboo, rattans, leaves, straw, coconut shells, coconut fibers, water hyacinth, and other handicraft products made from agricultural materials; preliminary processed cotton; newsprint;

- Medical equipment and instruments, medical bandages and sanitary pads; disease prevention and treatment drugs; chemical products and medicinal materials used as raw materials for producing preventive and curative drugs;

- Teaching and learning instruments, including models, drawings, boards, chalk, rulers, compasses, and specialized teaching, research, and scientific experiment instruments;

- Cultural, exhibition, physical training, and sports activities; art performances, film production; film import, distribution, and screening;

- Children's toys; all kinds of books, except the books specified in Clause 15, Article 5 of Value Added Tax Law 2008;

- Scientific and technological services according to Science and Technology Law 2013.

- Selling, leasing, or lease-purchasing social housing according to Housing Law 2023.

Thus, the list of goods and services subject to a 5% rate includes children's toys, scientific services, instructional materials for teaching and learning including models, drawings, boards, chalk, rulers, compasses, and specialized teaching instruments...

Sincerely!

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