What are regulations on Value-Added Tax (VAT) in 2023 in Vietnam? Will VAT continue to be reduced under Decree 15 in 2023 in Vietnam?

What are regulations on Value-Added Tax (VAT) in 2022 in Vietnam?

Pursuant to Clause 1 Article 8 of the Law on Value-Added Tax in 2008 (amened by Clause 3 Article 1 of the Law on amendments to the Law on Value-added tax in 2013; Clause 2 Article 1 of the Law on amendments to Law on Value-added tax, Law on special excise duty, Law on Tax administration in 2016) stipulating tax rate of 0% as follows:

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.

Pursuant to Clause 2 Article 8 of the Law on Value-Added Tax in 2008 (amened by Clause 3 Article 1 of the Law on amendments to the Law on Value-added tax in 2013; Clause 2 and 3, Article 1 of the Law on amendments to Law on Value-added tax, Law on special excise duty, Law on Tax administration in 2016) stipulating tax rate of 5% as follows:

Tax rates

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2. The tax rate of 5% applies to the following goods and services:

a/ Clean water for production and daily life;

b/ Fertilizers; ores for fertilizer production; insecticides, pesticides and plant and animal growth stimulators;

c/ Feeds for cattle, poultry and other domestic animals;

d/ Services of digging, embanking and dredging canals, ditches, ponds and lakes for agricultural production; growing, tending, and preventing pests and insects for, plants; preliminary processing and preservation of agricultural products;

e/ Unprocessed cultivation, husbandry and fishery products, except products specified in Clause 1, Article 5 of this Law;

f/ Preliminarily processed rubber latex; preliminarily processed turpentine; nets, main ropes and fibers for making fishing-nets;

g/ Fresh and live food; unprocessed forest products, except timber, bamboo shoots and products specified in Clause 1, Article 5 of this Law;

h/ Sugar; by-products in sugar production, including molasses, bagasse and sludge;

i/ Products made of jute, rush, bamboo, leaf, straw, coconut husks and shells and Eichhornia crassipes, and other handicrafts made of agricultural raw materials; preliminarily processed cotton; paper for newspaper printing;

j/ Special-purpose machinery and equipment for agricultural production, including ploughing machines, harrowing machines, rice-planting machines, seeding machines, rice-plucking machines, reaping machines, combine harvesters, agricultural product harvesters, insecticide or pesticide pumps or sprayers;

k/ Medical equipment and instruments; medical cotton and bandage; preventive and curative medicines; pharmaco-chemistry products and pharmaceuticals used as raw materials for the production of curative and preventive medicines;

l/ Teaching and learning aids, including models, figures, boards, chalk, rulers, compasses, and equipment and tools exclusively used for teaching, research and scientific experiments;

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

n/ Children toys; books of all kinds, except books specified in Clause 15, Article 5 of this Law;

o/ Scientific and technological services under the Law on Science and Technology.

Pursuant to Clause 3 Article 8 of the Law on Value-Added Tax in 2008 stipulating tax rate of 10% as follows:

The tax rate of 10% applies to goods and services not listed in Clauses 1 and 2 of this Article.

Pursuant to Clause 1 and 2, Article 1 of the Decree 15/2022/NĐ-CP stipulating some items that are subject to the tax rate of 8% as follows:

Value-added tax reduction for groups of goods and services currently being applied at the tax rate of 10%, except for the following groups of goods and services:

- Telecommunications, financial activities, banking, securities, insurance, real estate trading, metals and prefabricated metal products, mining products (excluding coal mining), coke, refined petroleum, chemical products. Details are in Appendix I issued together with this Decree.

- Products and services subject to excise tax. Details are in Appendix II issued together with this Decree.

- Information technology in accordance with the law on information technology. Details are in Appendix III issued with this Decree.

- The reduction of value-added tax for each type of goods and services specified in Clause 1 of this Article shall be applied uniformly at the stages of import, production, processing, business and trade. For the sold coal products (including the case of coal mined and then screened, classified according to a closed process, then sold) subject to value-added tax reduction. Coal products listed in Appendix I to this Decree are not eligible for value-added tax reduction at other stages other than the mining stage.

In case the goods and services mentioned in Appendices I, II and III issued together with this Decree are not subject to value-added tax or subject to 5% value-added tax under the provisions of this Law. Value-added tax shall comply with the provisions of the Law on Value-Added Tax and may not reduce value-added tax.

What are regulations on Value-Added Tax (VAT) in 2023 in Vietnam? Will VAT continue to be reduced under Decree 15 in 2023 in Vietnam?

Pursuant to Clause 1 Article 3 of the Decree 15/2022/NĐ-CP, VAT rate reduction from 10% to 8% is only applicable until December 31, 2022. Accordingly, from January 1, 2023, the VAT rate will return to the same until new regulations are issued to adjust.

In the absence of a new adjustment document, in 2023, the VAT rate will still be applied based on the guidance in the Law on Value Added Tax 2008 and related amendments and supplements.

Who shall pay VAT in Vietnam?

Pursuant to Clause 1 and 2, Article 2 of the Decree 209/2013/NĐ-CP stipulating tax payers as follows:

- Value-added tax payers include organizations and individuals producing or trading in goods or services subject to value-added tax (below referred to as business establishments) and organizations and individuals importing goods subject to value-added tax (below referred to as importers).

- Vietnam-based production and business organizations and individuals that purchase services (including services associated with goods) from foreign organizations without permanent establishments in Vietnam or overseas individuals not residing in Vietnam shall be value-added tax payers, unless they are not required to declare, calculate and pay value-added tax defined at point b Clause 3 of this Article.

Note: Permanent establishments and overseas individuals being non-residents at this Clause must comply with the laws on enterprise income tax and personal income tax.

Best regards!