The template for value-added tax reduction according to Resolution 142/2024/QH15 in Vietnam

The template for value-added tax reduction according to Resolution 142/2024/QH15 in Vietnam

The 8% value-added tax (VAT) reduction template according to Resolution 142 is used to declare and report the reduction of VAT to 8% for goods and services eligible for preferential treatment as stipulated in Resolution 142/2024/QH15.

Based on Appendix 4 issued together with Decree 72/2024/ND-CP, the template for the 8% VAT reduction according to Resolution 142 in 2024 (download here).

The template for value-added tax reduction according to Resolution 142/2024/QH15 in Vietnam - image from internet

Which entities are subject to value-added tax (VAT) in Vietnam?

Based on Article 4 of the Law on Value Added Tax 2008, which specifies the taxpayers.

Taxpayers

Taxpayers for value-added tax are organizations and individuals engaged in the production and business of goods and services subject to value-added tax (hereinafter referred to as businesses) and organizations and individuals importing goods subject to value-added tax (hereinafter referred to as importers).

Furthermore, according to Article 3 of Circular 219/2013/TT-BTC, the following provisions regarding value-added tax (VAT) taxpayers are outlined:

Taxpayers

VAT taxpayers are organizations and individuals engaged in the production and business of goods and services subject to VAT in Vietnam, regardless of industry, form of business, or business organization (hereinafter referred to as businesses), and organizations and individuals importing goods or purchasing services from abroad subject to VAT (hereinafter referred to as importers), including:

1. Business entities established and registered under the Enterprise Law, State Enterprise Law (now Enterprise Law), Cooperative Law, and other specialized business laws.

2. Economic organizations of political organizations, socio-political organizations, social organizations, occupational social organizations, armed forces units, public service organizations, and other organizations.

3. Foreign-invested enterprises and foreign parties participating in business cooperation under the Law on Foreign Investment in Vietnam (now the Investment Law); foreign organizations and individuals conducting business activities in Vietnam but not establishing legal entities in Vietnam.

4. Individuals, households, independent business groups, and other entities engaged in production, business, and import activities.

5. Organizations and individuals engaged in production and business activities in Vietnam purchasing services (including cases where services are associated with goods) from foreign organizations without a permanent establishment in Vietnam, and individuals residing outside Vietnam being non-resident subjects in Vietnam are responsible for VAT payment, except in cases where VAT declaration and payment are not required, as guided in Clause 2, Article 5 of this Circular.

Provisions on permanent establishments and non-resident subjects are implemented in accordance with laws on corporate income tax and personal income tax.

6. Branches of export processing enterprises established to engage in the purchase and sale of goods and directly related activities in Vietnam, as regulated by laws on industrial zones, export processing zones, and economic zones.

As regulated above, the entities required to pay value-added tax (VAT) include the following:

- Business entities established and registered under the Enterprise Law, Cooperative Law, and other specialized business laws.

- Economic organizations of political organizations, socio-political organizations, social organizations, occupational social organizations, armed forces units, public service organizations, and other organizations.
Enterprises with foreign investment and foreign parties participating in business cooperation under the Investment Law.

- Foreign organizations and individuals conducting business activities in Vietnam without establishing legal entities in Vietnam.

- Individuals, households, independent business groups, and other entities engaged in production, business, and import activities.

- Organizations and individuals engaged in production and business activities in Vietnam purchasing services from foreign organizations without a permanent establishment in Vietnam.

- Branches of export processing enterprises established to engage in the purchase and sale of goods and directly related activities in Vietnam, as regulated by laws on industrial zones, export processing zones, and economic zones.

When is the tax liability for VAT in Vietnam determined?

According to Article 8 of Circular 219/2013/TT-BTC, the specific tax determination time for value-added tax (VAT) is as follows:

- For the sale of goods: the time of transfer of ownership or the right to use the goods to the buyer, regardless of whether payment has been received or not.

- For the provision of services: the time of completion of the service provision or the time of issuing the service invoice, regardless of whether payment has been received or not.

- For telecommunication services: the time of data reconciliation on the telecommunications service charges under the economic contract between telecommunications service providers, but no later than 2 months from the month when the telecommunications service charges are incurred.

- For the supply of electricity and clean water: the date of recording the consumption of electricity or water on the meter for billing purposes.

- For real estate business activities, infrastructure construction, construction of houses for sale, transfer, or leasing: the time of receiving payment according to the project implementation progress or the payment schedule stated in the contract. Based on the amount received, the business entity shall declare and pay VAT on the output generated during the period.

- For construction, installation, including shipbuilding: the time of acceptance, handover of the construction work, construction item, completed construction or installation, regardless of whether payment has been received or not.

- For imported goods: the time of customs declaration registration.