Goods and services not eligible for VAT reduction from July 1, 2023 in Vietnam

Goods and services not eligible for VAT reduction from July 1, 2023 in Vietnam (Internet image)

1. Goods and services not eligible for VAT reduction from July 1, 2023 in Vietnam

According to Clause 1, Article 1 of Decree 44/2023/ND-CP stipulating Goods and services not eligible for VAT reduction from July 1, 2023 in Vietnam:

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 with Decree 44/2023/ND-CP.

- 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 with Decree 44/2023/ND-CP.

- VAT on goods and services of a specific type prescribed in Clause 1 of this Article 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.

2. Procedures for reducing VAT on goods and services in Vietnam

- For business establishments specified at Point a, Clause 2, Article 1 of Decree 44/2023/ND-CP, when issuing VAT invoices for goods and services eligible for VAT reduction, the business establishments shall write “8%” on the “VAT rate” line, VAT amount payable, and total amount payable by the buyer on the issued invoice.

The good seller or service provider shall declare output VAT and the good buyer or service user shall declare and deduct input VAT according to the VAT amount written on the VAT invoice.

- When issuing sales invoices for goods and services eligible for VAT reduction, the business establishments specified in Point b Clause 2 of this Article shall write the full amount of the good or service before reduction in the "Thành tiền" ("Amount") column, the amount payable after reduction (by 20% of the rate (%) on revenue) on the “Cộng tiền hàng hóa, dịch vụ” ("Total amount") line, and the note “đã giảm... (số tiền) tương ứng 20% mức tỷ lệ % để tính thuế giá trị gia tăng theo Nghị quyết số 101/2023/QH15” ("an amount of......., equivalent to 20% of the rate (%) used as the basis for calculating VAT, is reduced according to the Resolution No. 101/2023/QH15”) on the issued invoice.

(Clause 3, Article 1 of Decree 44/2023/ND-CP)

Nguyen Ngoc Que Anh

>> CLICK HERE TO READ THIS ARTICLE IN VIETNAMESE