Implementation of the Decree to reduce 2% of VAT in Vietnam

Implementation of the Decree to reduce 2% of VAT in Vietnam

On June 24, 2023, the National Assembly promulgated Resolution No. 101/2023/QH15 on the 5th session of the 15th National Assembly.

On June 30, 2023, the Government of Vietnam promulgated Decree No. 44/2023/ND-CP on the VAT reduction policy according to Resolution No. 101/2023/QH15 of the National Assembly.

The Decree provides for a VAT reduction from July 01, 2023 to the end of December 31, 2023 for goods and services to which 10% VAT is applied, except for some goods and services.

Departments of Taxation should proactively disseminate and inform taxpayers in the provinces/cities to promptly implement the Decree on VAT reduction according to Resolution No. 101/2023/QH15 of the National Assembly./.

Goods and services ineligible for tax reduction in Vietnam

 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.

- 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 Article 1 with 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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