Promulgating the Decree which stipulates the policy of reducing value-added tax applicable from January 1, 2024 in Vietnam
Have the Decree stipulating the policy of reducing value-added tax in Vietnam been issued yet? - Ms. Nhan (HCMC)
Promulgating the Decree which stipulates the policy of reducing value-added tax applicable from January 1, 2024 in Vietnam
On December 28, 2023, the Vietnamese government issued Decree 94/2023/ND-CP regulating the policy of reducing value-added tax (VAT) in accordance with Resolution 110/20203/QH15.
The VAT reduction policy applies to goods and services currently subject to a tax rate of 10%, except for the following groups of goods and services:
- Telecommunications, financial activities, banking, securities, insurance, real estate trading, metals and metal products, mining products (excluding coal mining), coke, refined petroleum, chemical products.
- Goods and services subject to special consumption tax.
- Information technology according to the law on information technology.
Note: The VAT reduction for each type of goods and services is applied uniformly at the import, production, processing, and commercial trading stages.
- For the item of coal mined for sale (including the case of coal mined and then screened and sorted through a closed-loop process before being sold), it is subject to VAT reduction. Coal items in Appendix 1 attached to Decree 94/2023/ND-CP, at other stages other than the sale stage of mining, are not eligible for VAT reduction.
- In case the goods and services listed in Appendices 1, 2 and 3 attached to Decree 94/2023/ND-CP are subject to VAT exemption or subject to VAT at a rate of 5% under the provisions of the VAT Law, they shall be implemented in accordance with the provisions of the VAT Law and are not eligible for VAT reduction.
Promulgating the Decree which stipulates the policy of reducing value-added tax applicable from January 1, 2024 in Vietnam - Image from Internet
How much VAT reduction is applied to household businesses that calculate VAT according to the percentage method on revenue in Vietnam?
According to Clause 2 Article 1 of Decree 94/2023/ND-CP, the VAT reduction policy is as follows:
VAT Reduction
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2. VAT Reduction Rate
a) Businesses that calculate VAT according to the deduction method are subject to a VAT rate of 8% for goods and services specified in Clause 1 of this Article.
b) Businesses (including household businesses and individuals who are self-employed) that calculate VAT according to the percentage method on revenue are entitled to a 20% reduction in the percentage rate for calculating VAT when issuing invoices for goods and services that are subject to VAT reduction specified in Clause 1 of this Article.
Therefore, household businesses that calculate VAT according to the percentage method on revenue are entitled to a 20% reduction in the percentage rate for calculating VAT when issuing invoices for goods and services that are subject to VAT reduction.
What goods and services are applied with the tax rate of 10% in Vietnam?
Pursuant to Clause 3 Article 8 of the Law on Value-Added Tax in 2008 stipulating tax rates as follows:
Tax rates
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3. The tax rate of 10% applies to goods and services not listed in Clauses 1 and 2 of this Article.
As regulations above, the tax rate of 10% applies to goods and services that are not applied with the tax rate of 0% and 5%.
What services are applied with the tax rate of 0% in Vietnam?
Pursuant to Clause 3 Article 8 of the Law on Value-Added Tax in 2008 (amended by Clause 3 Article 1 of the Law on amendments to the Law on Value-Added Tax in 2013 and Clause 2 Article 1 of the Law on amendments to some Articles of the Law on Value-added tax, Law on special excise duty, Law on Tax administration in 2016) stipulating tax rates as follows:
Tax rates
1. The tax rate of 0% is applicable to exported goods and services, international transport, goods and services that are not subject to VAT according to Article 5 of this Law when they are exported, except for the cases below:
a) Transferring technologies, transferring intellectual property rights abroad;
b) Reinsurance abroad;
c) Credit services;
d) Capital transfer;
dd) Derivative financial services;
e) Telecommunications and postal services;
g) The exports specified in Clause 23 Article 5 of this Law.
Exported goods/services that are consumed outside Vietnam, within free trade zones; goods/services provided for foreign customers as prescribed by the Government.
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As regulations above, services that are applied with the tax rate of 0% in Vietnam are:
- Exported goods and services, international transport
- Goods and services that are not subject to VAT according to Article 5 of the Law on Value-Added Tax in 2008 (amended by Clause 1 Article 1 of the Law on amendments to the Law on Value-Added Tax in 2013 and Clause 1 Article 3 of the Law on amendments to some Articles of the Tax Laws in 2014)
In addition, above services must not be in the following cases:
- Transferring technologies, transferring intellectual property rights abroad;
- Reinsurance abroad;
- Credit services;
- Capital transfer;
- Derivative financial services;
- Telecommunications and postal services;
Best regards!
