Procedure for applying VAT reduction in Vietnam according to Decree 44/2023/ND-CP

Procedure for applying VAT reduction in Vietnam according to Decree 44/2023/ND-CP (Internet image)

Regarding this issue, LawNet would like to answer as follows:

1. VAT reduction in Vietnam according to Decree 44/2023/ND-CP

According to Clause 2 of Article 1 of Decree 44/2023/ND-CP, the value-added tax reduction rate is as follows:

(1) Business establishments that calculate value-added tax by the deduction method may apply the value-added tax rate of 8% for goods and services specified in Clause 1 of Article 1 of Decree 44/2023/ND-CP.

(2) Business establishments (including business households and business individuals) that calculate value-added tax according to the percentage method on revenue are entitled to a reduction of 20% of the percentage rate to calculate value-added tax when issuing invoices for goods and services eligible for the value-added tax reduction specified in Clause 1, Article 1 of Decree 44/2023/ND-CP.

2. Procedure for applying VAT reduction in Vietnam according to Decree 44/2023/ND-CP

According to Clause 3, Article 1 of Decree 44/2023/ND-CP, the procedure of reduction of value added tax in Vietnam is as follows:

- For business establishments specified at Point a, Clause 2, Article 1 of Decree 44/2023/ND-CP, when making a value-added invoice for the provision of goods and services subject to value-added tax reduction, write "8%" at the value-added tax rate line; 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, and business establishments purchasing goods and services shall declare and deduct input value-added tax. according to the reduced tax amount written on the value-added invoice.

- For business establishments specified at Point b, Clause 2, Article 1 of Decree 44/2023/ND-CP, when making a sales invoice for the provision of goods and services subject to value-added tax reduction, in the column "Total cost" write all the costs for goods and services before the reduction, and in the line "Adding cost for goods and services," write the number that has reduced 20% of the percentage of revenue;

Also note: "reduced... (amount) equivalent to 20% of the percentage rate for calculating value-added tax according to Resolution No. 101/2023/QH15".

Notes on the order of value-added tax reduction according to Clauses 4 and 5, Article 1 of Decree 44/2023/ND-CP:

- In the case of business establishments specified at Point a, Clause 2 of this Article, when selling goods or providing services, different tax rates shall apply, and the value-added invoice must clearly state the tax rate of each good or service as prescribed in Clause 3, Article 1 of Decree 44/2023/ND-CP.

In the case of business establishments specified at Point b, Clause 2, Article 1 of Decree 44/2023/ND-CP, when selling goods or providing services, the sale invoice must clearly state the amount of the reduction as prescribed in Clause 3, Article 1 of Decree 44/2023/ND-CP.

- In case the business establishment has issued an invoice and declared the tax rate or percentage to calculate the value added tax that has not been reduced according to the provisions of Decree 44/2023/ND-CP, the seller and the buyer shall handle the invoice 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 input tax (if any).

3. When will the VAT reduction under Decree 44/2023/ND-CP be applied in Vietnam?

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

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