Duration of VAT reduction according to Decree 180 in Vietnam

Duration of VAT reduction according to Decree 180 in Vietnam​ (Image from the internet)

Duration of VAT reduction according to Decree 180 in Vietnam

On December 31, 2024, the Government of Vietnam issued Decree 180/2024/ND-CP regarding the policy of reducing value-added tax according to Resolution 174/2024/QH15.

According to Article 2 of Decree 180/2024/ND-CP on the effective date and implementation organization:

1. This Decree takes effect from January 01, 2025, until the end of June 30, 2025.

2. Ministries according to their functions, duties, and People's Committees of provinces and central-affiliated cities direct the relevant agencies to deploy propaganda, guidance, inspection, and supervision so that consumers understand and benefit from the value-added tax reduction stipulated in Article 1 of this Decree, focusing on measures to stabilize the supply and demand of goods and services subject to value-added tax reduction to maintain market price stability (prices excluding value-added tax) from January 01, 2025, to the end of June 30, 2025.

3. During implementation, if any issues arise, the Ministry of Finance is responsible for guiding and resolving them.

4. Ministers, Heads of ministerial-level agencies, Heads of agencies attached to the Government, Chairpersons of People's Committees of provinces and central-affiliated cities, enterprises, organizations, and individuals involved are responsible for implementing this Decree.

Thus, the duration of the VAT reduction according to Decree 180 lasts from January 01, 2025, to the end of June 30, 2025.

VAT reduction policy according to Decree 180 in Vietnam

A reduction of value-added tax is applied to groups of goods and services currently subject to a 10% tax rate, except for the following groups of goods and services:

- Telecommunications, financial activities, banking, securities, insurance, real estate business, metals and pre-fabricated metal products, mineral products (excluding coal mining), coking coal, refined petroleum, chemical products. Details in Appendix I issued with Decree 180/2024/ND-CP.

- Products and services subject to special consumption tax. Details in Appendix II issued with Decree 180/2024/ND-CP.

- Information technology according to the laws on information technology. Details in Appendix III issued with Decree 180/2024/ND-CP.

- VAT reduction for each type of goods or services mentioned above is uniformly applied at import, production, processing, and trade stages. For the coal mining products sold (including cases where coal is mined, subsequently screened, sorted according to a closed procedure and then sold) subject to value-added tax reduction. Coal products from Appendix I issued with Decree 180/2024/ND-CP, at other stages than the mining selling stage, are not eligible for value-added tax reduction.

Corporations and economic groups performing the closed-loop process for sale are also eligible for value-added tax reduction for coal mining products sold.

For goods or services mentioned in Appendices I, II, and III issued with Decree 180/2024/ND-CP subject to non-VAT or 5% VAT as prescribed by the Law on Value-Added Tax, such regulations still apply and VAT reduction is not applicable.

Regarding the VAT reduction rate:

(i) Business establishments calculating VAT by the deduction method apply an 8% VAT rate for the specified goods and services.

(ii) Business establishments (including business households and individuals) calculating VAT by percentage on revenue are reduced by 20% of the percentage rate to calculate VAT when issuing invoices for goods and services eligible for VAT reduction.

Regarding the procedure and implementation steps:

- For business establishments according to (i), when issuing VAT invoices providing goods and services subject to VAT reduction, at the VAT rate line, write "8%"; VAT amount; total amount payable by the buyer. Based on the VAT invoice, the selling businesses declare output VAT, and purchasing businesses declare input VAT deduction according to the reduced tax amount recorded on the VAT invoice.

- For business establishments according to (ii), when issuing sales invoices providing goods and services subject to VAT reduction, in the "Amount" column, fill in the full price before reduction, at the "Total amount for goods and services" line, record the amount reduced by 20% of the percentage rate on revenue, and note: "reduced by... (amount) corresponding to 20% of the percentage rate to calculate VAT according to Resolution 174/2024/QH15”.

In cases where business establishments in (i) sell goods or provide services with different VAT rates, the VAT invoice must specify the tax rate of each item according to Clause 3, Article 1 of Decree 180/2024/ND-CP.

In cases where business establishments in (ii) sell goods or provide services, the sales invoice must specify the amount reduced according to Clause 3, Article 1 of Decree 180/2024/ND-CP.

If a business establishment has issued invoices and declared according to a VAT rate or percentage rate for calculating VAT not yet reduced under this Decree, the seller and buyer handle the issued invoices following legal regulations on invoices and documents. Based on the processed invoice, the seller declares adjustments to output tax, and the buyer declares adjustments to input tax (if any).

Business establishments under this Article declare goods and services eligible for VAT reduction using Form No. 01 in Appendix IV issued with Decree 180/2024/ND-CP along with the VAT return.

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