Vietnam: Proposal to reduce VAT for businesses affected by Covid-19 until the end of 2021

Vietnam: Proposal to reduce VAT for businesses affected by Covid-19 until the end of 2021 (Artwork)

Specifically, reducing VAT for enterprises and organizations engaged in production and business activities in economic sectors, including:

(i) Activities: Transport (rail, water, air transport, and other road transport); Lodging; Food Service; Activities of travel agencies, tour businesses and support services, related to the promotion and organization of tours;

(ii) Activities: Publishing activities; Cinematographic activities, television program production, sound recording and music publishing; Creative, artistic and recreational activities in the library, archive, museum and other cultural activities; Sports, entertainment and recreational activities.

Note:  Activities in group (ii) do not include publishing software and goods and services performed on online platforms.

Goods and services eligible for tax reduction mentioned above shall comply with the Appendix to the List of goods and services subject to VAT reduction according to the Resolution of the Standing Committee of the National Assembly of Vietnam promulgated together with the Draft Decree.

*About VAT reduction

- Enterprises and organizations paying VAT by the credit method are entitled to a 30% reduction in VAT rates for goods and services in production and business activities specified in Clause 1, Article 3 of the Draft Decree.

- Enterprises and organizations paying VAT under the percentage method on revenue are entitled to a 30% reduction of the percentage rate to calculate VAT on goods and services in production and business activities specified in Clause 1, Article 3 of the Draft Decree.

Note:  In case goods and services belonging to production and business activities specified in Clause 1, Article 3 of the Draft Decree are not subject to VAT, the provisions of the Law on VAT shall be followed.

*About the order and procedures for implementation

- For enterprises and organizations specified at Point a, Clause 2, Article 3 of the Draft Decree of Vietnam, when making VAT invoices to provide goods and services which are subject to VAT reduction, in the line of VAT rate, write "the prescribed tax rate (5% or 10%) x 70%"; VAT amount; total amount to be paid by the buyer.

Based on VAT invoices, enterprises and organizations that produce and trade in goods and services declare output VAT, and enterprises and production and business organizations that purchase goods and services declare and deduct input VAT under the reduced tax amount written on the VAT invoice.

- For enterprises and organizations specified at Point b, Clause 2, Article 3 of the Draft Decree, when making sales invoices for goods and services that are subject to increased tax reduction, the column “Total money” must be filled in: enough money for goods and services before the reduction, in the line "Addition of goods and services" write the number that has reduced the percentage of revenue by 30%, and also note: "reduced... (amount of money) ) equivalent to 30% of the rate to calculate VAT under Resolution No. 4/2021/UBTVQH15", When making VAT declaration No. 04/GTGT, in the column "VAT payable" according to the turnover of taxable goods and services multiplied by (3) the percentage rate to calculate VAT x 70%.

Note:

- If enterprises or organizations make invoices for many goods and services, they shall make separate invoices for goods and services and receive VAT reduction.

-If enterprises or organizations have issued invoices and declared at the tax rate or percentage for calculating VAT that has not yet been reduced, the seller and the buyer must make a record or have a written agreement stating: clear errors, and at the same time, the seller issues an invoice to correct the error, delivers the adjusted invoice and returns the reduced VAT to the buyer. Based on the adjusted invoice, the seller declares the adjustment of sales volume, output tax, and the buyer declares adjustment of purchase sales and input tax (if any).

- Enterprises and organizations specified in Article 3 of the Draft Decree declare activities eligible for VAT reduction according to the VAT reduction Appendix issued with the Draft Decree together with the VAT declaration.

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Bao Ngoc

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