HCMC Department of Taxation: Guidance on 2% VAT reduction under Decree 44/2023/ND-CP

HCMC Department of Taxation: Guidance on 2% VAT reduction under Decree 44/2023/ND-CP (Internet image)

Guidance on 2% VAT reduction under Decree 44/2023/ND-CP

Ho Chi Minh City Tax Department issued Official Dispatch 8732/CTTPHCM-TTHT dated 12/7/2023 on the reduction of 2% of value-added tax in Decree 44/2023/ND-CP.

The official dispatch clearly states that the Government has just issued Decree 44/2023/ND-CP dated June 30, 2023, regulating
Regarding value-added tax reduction under Resolution 101/2023/QH15 dated June 24, 2023, of the National Assembly, the Ho Chi Minh City Tax Department instructs business establishments in Ho Chi Minh City the following:

1. Regarding goods and services eligible for a value-added tax reduction

Value-added tax reduction for groups of goods and services is currently being applied at the tax rate of 10%, except for the following groups of goods and services:

- Telecommunications, financial activities, banking, securities, insurance, real estate trading, metals and prefabricated metal products, mining products (excluding coal mining), coke, refined petroleum, chemical products. Details are in Appendix I issued together with Decree 44/2023/ND-CP.

- Products, goods, and services subject to excise tax. Details are in Appendix II issued together with Decree 44/2023/ND-CP.

- Information technology in accordance with the law on information technology. Details are in Appendix III issued together with Decree 44/2023/ND-CP.

- The reduction of value-added tax for each type of good and service specified in Clause 1, Article 1 of Decree 44/2023/ND-CP uniformly applied at the stages of import, production, processing, business, and trade. For the sold coal products (including the case of coal mined and then screened, classified according to a closed process, then sold) subject to value-added tax reduction. Coal products listed in Appendix I promulgated together with Decree 44/2023/ND-CP are not eligible for value-added tax reduction at stages other than mining and selling.

Corporations and economic groups that carry out a closed process to sell coal products are also subject to a value-added tax reduction for sold coal products.

In case the goods and services mentioned in Appendices I, II, and III issued together with Decree 44/2023/ND-CP are not subject to value added tax or are subject to value-added tax of 5% according to the provisions of the Law on Value-Added Tax, they shall comply with the provisions of the Law on Value-Added Tax and shall not be entitled to a reduction of value-added tax.

2. Value-added tax reduction and implementation order and procedures in Vietnam

- Business establishments that calculate value-added tax by the credit method may apply the value-added tax rate of 8% for goods and services specified in Decree 44/2023/ND-CP, and when making invoices, in the value-added tax line, write "8%"; value added tax; total amount to be paid by the buyer. Based on value-added invoices, business establishments selling goods and services shall declare output value-added tax; business establishments purchasing goods shall make the declaration and deduction of input value-added tax according to the reduced tax amount written on the value-added invoice. The value-added invoice must clearly state the tax rate for each good or service.

- Business establishments that calculate value-added tax by the method of percentage on revenue may reduce 20% of the percentage rate to calculate value-added tax. When making a sales invoice for the provision of goods and services subject to value-added tax reduction, in the column "Total money" write the full amount of goods and services before the reduction, and in the line "Adding money for goods and services" write the number that has reduced 20% of the percentage of revenue, at the same time noting: "reduced... (amount) equivalent to 20% of the percentage to calculate value-added tax according to Resolution No. 101/2023/QH15".

- In cases where the business establishment has issued invoices and declared them according to the tax rate or percentage to calculate the value added tax that has not been reduced as prescribed in Decree 44/2023/ND-CP, the seller and the buyer handle the invoices in accordance with the law on invoices and documents. Based on the invoice after processing, the seller declares and adjusts the output tax, and the buyer declares the adjustment of the input tax (if any).

In cases where business establishments providing goods and services are entitled to a reduction in value added tax and there is no reduction in value added tax, a single invoice shall be recorded.

Business establishments eligible for value-added tax reduction shall declare and reduce value-added tax according to Form No. 01 in Appendix IV issued with Decree 44/2023/ND-CP along with the Value Added Tax Return.

Decree 44/2023/ND-CP takes effect from July 1, 2023, to the end of December 31, 2023.

Duong Chau Thanh

>> CLICK HERE TO READ THIS ARTICLE IN VIETNAMESE