Vietnam: List of goods eligible for VAT reduction

Vietnam: List of goods eligible for VAT reduction

1. What is VAT?

VAT is a tax calculated on the added value of goods and services arising in the process from production, circulation to consumption according to Article 2 of the Law on Value Added Tax 2008.

2. List of goods eligible for VAT reduction

Goods and services eligible for VAT reduction according to Clause 1, Article 1 of Vietnam's Decree 15/2022/ND-CP are the group of goods and services currently subject to the 10% tax rate, except for the following goods and services:

(1) Telecommunications, financial activities, banking, securities, insurance, real estate trading, metals and prefabricated metal products, mining products (excluding coal mining), coal coke, refined petroleum, chemical products. Details are in Appendix I issued together with Vietnam's Decree 15/2022/ND-CP.

Appendix I

(2) Products, goods and services subject to excise tax. Details are in Appendix II issued together with Vietnam's Decree 15/2022/ND-CP.

Appendix II

(3) Information technology in accordance with the law on information technology. Details are in Appendix III, issued together with Vietnam's Decree 15/2022/ND-CP.

Appendix III

- The reduction of VAT for each type of goods and services specified in (1) of this Section shall be applied uniformly at the stages of importation, production, processing, business and trade.

- For the sold coal mined (including the case of coal mined and then screened, classified and sold by a closed process) subject to VAT reduction. Coal products listed in Appendix I, at other stages other than mining, are not eligible for VAT reduction.

In case goods and services mentioned in Appendices I, II and III are not subject to VAT or subject to 5% VAT under the Law on Value-Added Tax, the provisions of the Law on Value-Added Tax shall be applied.

3. VAT reduction

The reduction of VAT according to Clause 2, Article 1 of Vietnam's Decree 15/2022/ND-CP is as follows:

(1) Business establishments that calculate VAT by the credit method may apply the VAT rate of 8% to goods and services eligible for VAT reduction.

(2) Business establishments (including business households and individuals) that calculate value-added tax according to the percentage method on revenue are entitled to a 20% reduction of the percentage rate to calculate VAT when implementing and issuing invoices for goods and services eligible for VAT reduction.

4. Procedures for VAT reduction

The procedures of VAT reduction according to Clause 3, Article 1 of Vietnam's Decree 15/2022/ND-CP ars as follows:

- For business establishments specified in (1), Section 4, when making VAT invoices providing goods and services subject to value-added tax reduction, in the value-added tax rate line, write "8" %"; VAT amount; total amount to be paid by the buyer.

Based on VAT invoices, business establishments selling goods and services shall declare output VAT, and business establishments purchasing goods and services shall declare and deduct input VAT according to the reduced tax amount stated on the VAT invoice. 

- For business establishments specified in (2), section 4, when making sales invoices for the provision of goods and services subject to VAT reduction, in the column "Price" write the full amount of goods and services before reduction,

In the line "Adding for goods and services" write the number that has reduced 20% of the percentage of revenue and also note: "reduced... (amount) corresponds to 20% of the percentage rate to VAT calculation according to Resolution 43/2022/QH15".

5. Regulations on application of VAT reduction

According to Clauses 4, 5, 6 and 7 Article 1 of Vietnam's Decree 15/2022/ND-CP (amended in Decree 41/2022/ND-CP) regulations on the application of VAT reduction are as follows:

- In case a business establishment specified in (1), item 4, when selling goods or providing services, applies different tax rates, the VAT invoice must clearly state the tax rate of each good or service according to the law.

- In case a business establishment specified in (2), item 4, when selling goods or providing services, the sales invoice must clearly state the amount of the reduction as prescribed.

- In case the business establishment has issued an invoice and declared according to the tax rate or percentage to calculate the VAT that has not been reduced as prescribed, the seller and the buyer must make a record or have a written agreement specifying the error,

At the same time, the seller issues a correcting invoice and delivers the adjusted invoice to the buyer. Based on the adjusted invoice, the seller declares the adjustment of output tax, and the buyer declares the adjustment of input tax (if any).

- In case a business establishment of goods and services eligible for VAT reduction has issued an ordered invoice printed in the form of a pre-printed ticket with the unused face value (if any) and has a need to continue using it:

Business establishments shall make stamps according to the price that has been reduced by 2% of the VAT rate or the price that has been reduced by 20% of the percentage rate next to the pre-printed price criteria for continued use.

- Business establishments shall declare VAT-reduced goods and services according to Form No. 01 in Appendix IV issued with Vietnam's Decree 15/2022/ND-CP together with the value-added tax declaration.

Form No. 01

Quoc Dat

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