Goods and services eligible for value-added tax reduction of 8% until the end of 2023 in Vietnam

Goods and services eligible for value-added tax reduction of 8% until the end of 2023 in Vietnam (Internet image)

Regarding this issue, LawNet would like to answer as follows:

On June 30, 2023, the Government of Vietnam issued Decree 44/2023/ND-CP prescribing value-added tax (VAT) reduction under the Resolution  101/2023/QH15

Goods and services eligible for value-added tax reduction of 8% until the end of 2023 in Vietnam

According to Clause 1, Article 1 of 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.

How is the VAT reduction of 8% implemented by the organization in Vietnam?

Specifically, according to  Article 2 of Decree 44/2023/ND-CP, the reduction of value-added tax on goods and services to 8% from July 1, 2023 is organized as follows:

- Decree 44/2023/ND-CP takes effect from July 01, 2023 to December 31, 2023 inclusively.

- Ministries, within the ambit of their assigned functions and tasks, and Provincial People’s Committees shall direct relevant agencies to disseminate, instruct and inspect the implementation of regulations on VAT reduction in Article 1 of Decree 44/2023/ND-CP,

Especially solutions for stabilizing supply and demand for goods and services eligible for VAT reduction so as to ensure stable market prices of goods and services (prices exclusive of VAT) for the period from July 01, 2023 to December 31, 2023 inclusively.

- Difficulties that arise during the implementation of this Decree should be reported to the Ministry of Finance of Vietnam for consideration.

- Ministers, heads of ministerial agencies, heads of Governmental agencies, Chairpersons of Provincial People’s Committees and relevant enterprises, organizations and individuals are responsible for the implementation of Decree 44/2023/ND-CP.

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