General Department of Customs of Vietnam to guide the implementation of VAT reduction according to Decree 44/2023/ND-CP

On June 30, 2023, the General Department of Customs issued Official Dispatch 3431/TCHQ-TXNK on the implementation of Decree 44/2023/ND-CP.

Official Dispatch 3431/TCHQ-TXNK

General Department of Customs of Vietnam to guide the implementation of VAT reduction according to Decree 44/2023/ND-CP

On June 30, 2023, the Government issued Decree 44/2023/ND-CP stipulating the value-added tax reduction policy under Resolution 101/2023/QH15 and taking effect as of July 1, 2023.

The General Department of Customs guides the implementation of the contents related to the reduction of the World Trade Organization according to Decree 44/2023/ND-CP in the field of Customs as follows:

- Regarding the value-added tax (VAT) reduction policy:

+ The reduction of 2% of the VAT rate for groups of goods currently applied at the tax rate of 10% (remaining 8%), except for some of the following groups of goods: telecommunications, information technology, metals, prefabricated metal products, mining products (not coal mining), coke, refined petroleum, chemical products, and goods subject to excise tax, comply with the provisions of Clause 1, Article 1 of Decree 44/2023/ND-CP.

+ Items not eligible for VAT reduction are specified in Appendices I, II, and III issued together with Decree 44/2023/ND-CP.

- Regarding the list of goods not eligible for VAT reduction:

+ For HS codes in column (10) Appendix I, column (10) Part A, and column (4) Part B Appendix III for lookup only. The determination of HS codes for actually imported goods shall comply with the provisions on goods classification in the Customs Lawand legal documents guiding the implementation of the Customs Law.

+ Lines with an asterisk (*) in column (10) Appendix I, column (10) Part A and column (4) Part B Appendix III, HS code, shall be declared according to the actual imported goods.

More details can be found in Official Dispatch 3431/TCHQ-TXNK, dated June 30, 2023.

Goods and services are not eligible to 8% VAT reduction from July 1, 2023 in Vietnam

According to Decree 44/2023/ND-CP, VAT on goods and services that are currently subject to 10% VAT shall be reduced, 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 enclosed herewith.

- Goods and services subject to excise tax. Further details are provided in Appendix II enclosed with Decree 44/2023/ND-CP.

- Information technology products and services as prescribed in the Law on information technology.  Further details are provided in Appendix III enclosed herewith.

- VAT on goods and services of a specific type prescribed in Clause 1 of Article 1 of Decree 44/2023/ND-CP shall be reduced consistently at all stages, including import, production, processing and trading. 

Coal products mined for sale (including coal products mined and then washed, sieved and classified under a closed process before they are sold) are eligible for VAT reduction. Coal products in Appendix I enclosed with Decree 44/2023/ND-CP are not eligible for VAT reduction at any stages other than the mining stage.

Coal products produced under a closed process of economic corporations or groups shall be also eligible for VAT reduction.

In case any of the goods and services in Appendixes I, II and III enclosed with Decree 44/2023/ND-CP is not subject to VAT or is subject to 5% VAT in accordance with the Law on value-added tax, VAT on that good or service shall be paid in accordance with the Law on value-added tax and shall not be reduced.

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