What is the time limit for businesses in Vietnam to enjoy a 2% VAT reduction in 2023?

Proposal: Continue the 2% VAT reduction in the first 6 months of 2024 in Vietnam

According to Subsection 3, Section 1 of the Resolution 164/NQ-CP in 2023, after the regular meeting of the Government in September 2023 and the Government's online conference with localities, the Government requires the Ministry of Finance to coordinate with local authorities to implement the following tasks:

- Focus on implementing effective and decisive solutions to ensure that the state budget revenue in 2023 meets the budget assigned by the National Assembly, collect the right amount, collect enough, collect on time, expand the revenue base, especially from e-commerce, digital platforms, and combat tax evasion, especially for catering services and night economic activities. Manage state budget expenditures in 2023 closely to the budget assigned, drastically cut down on regular expenditures and non-essential spending tasks.

- Continue to effectively implement the tax, fee, stamp duty, and land rent exemption, reduction, and extension policies that have been issued. For policies that expire at the end of 2023, proactively research, review, consider, and promptly propose and report to the competent authority to extend in case of need to continue to address difficulties for production, business, and people's lives.

- Urgent completion of the dossier to report to the Standing Committee of the National Assembly for consideration and continued application of the environmental protection tax rate for gasoline, oil, and lubricants as stipulated in Resolution No. 30/2022/UBTVQH15 in 2024, submitted to the Government in October 2023.

- Propose to the National Assembly to continue to reduce the value-added tax by 2% in the first 6 months of 2024 and assign the Standing Committee of the National Assembly to consider and decide in the time between the two sessions of the National Assembly if the economic and business situation is still difficult, report to the National Assembly at the next session, report to the Prime Minister before July 7, 2023.

- Chair in agreement with the Ministry of Transport and relevant localities on the amount of spending from the increase in revenue and savings in 2021 allocated for 3 highway construction projects as directed by the Government, report to the Prime Minister, summarize in the report assessing the implementation of the state budget budget for 2023 and the state budget budget for 2024 to submit to the National Assembly for permission to transfer to 2023.

- Actively coordinate with relevant agencies of the National Assembly to report and explain to the Standing Committee of the National Assembly on the plan to use the increase in central budget revenue in 2022; urgently implement the plan after it is approved by the Standing Committee of the National Assembly and the National Assembly.

- Urgent proposal, report to the Prime Minister before October 20, 2023 on the direction of handling and resolving difficulties when transferring the capital of Vietnam Airlines at Pacific Airlines.

- Based on the proposals of ministries, agencies, and localities on fee and stamp duty policies to encourage people and businesses to use online public services (such as: zero-fee fee or 50% fee reduction when using online public services, the application period is until the end of 2025), the Ministry of Finance studies, proposes, and reports to the Prime Minister in October 2023.

What is the time limit for businesses in Vietnam to enjoy a 2% VAT reduction in 2023? - Source: Internet

What is the time limit for businesses in Vietnam to enjoy a 2% VAT reduction in 2023?

Pursuant to Article 1 of the Decree 44/2023/NĐ-CP, VAT on goods and services that are currently subject to 10% VAT shall be reduced to 8%, except the following goods and services:

- Telecommunication, financial activities, banking activities, securities, insurance, trading of real estate, metal and precast metal products, mining products (excluding coal mining), coke mining, refined oil, chemical products. Further details are provided in Appendix I of the Decree 44/2023/NĐ-CP.

- Goods and services subject to excise tax. Further details are provided in Appendix II of the Decree 44/2023/NĐ-CP.

- Information technology products and services as prescribed in the Law on information technology. Further details are provided in Appendix III of the Decree 44/2023/NĐ-CP. 

Pursuant to Article 2 of the Decree 44/2023/NĐ-CP stipulating the time period for reducing the value-added tax in 2023, the reduction of VAT to 8% will be applied from July 1, 2023 to December 31, 2023.

Who are individuals not required to declare and pay value-added tax in Vietnam?

Pursuant to Article 2 of the Decree 209/2013/NĐ-CP stipulating individuals not required to declare and pay value-added tax in Vietnam as follows:

1) Organizations and individuals receive amounts involving compensation, awards, subsidies, money for transfer of emission right and other financial revenues.

2) Vietnam-based production and business organizations and individuals that purchase services from foreign organizations without permanent establishments in Vietnam or overseas individuals not residing in Vietnam including the following cases:

- Repair of means of transport, machinery or equipment (including supplies and spare parts);

- Advertisement and marketing;

- Investment and trade promotion;

- Goods sale and service provision brokerage: or training; or share with foreign partners charges for international post or telecommunications services provided outside Vietnam.

3) The non-business organizations and individuals are not value- added tax payer upon selling assets.

4) Organizations and individuals that transfer investment projects for production of and trading in goods or services subject to value-added tax to enterprises or cooperatives.

5) Cultivation, husbandry and aquatic products which have not yet been processed into other products or have been just preliminarily processed and sold to enterprises or cooperatives, except for case defined at Clause 1 Article 5 of the Law on value-added tax in 2008.

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