On November 29, the National Assembly agreed to reduce by 2% VAT from January 1, 2024 to June 30, 2024.

1. TYPES OF GOODS AND SERVICES THAT ARE ELIGIBLE FOR VAT REDUCTION AND NON-REDUCTION

Based on Clause 1, Article 1 of Decree 94/2023/ND-CP, the 2% reduction in VAT will be applied to groups of goods and services currently applying the 10% VAT (reduced to 8%), except for some groups of goods and services following:

1. Telecommunications, financial activities, banking, securities, insurance, real estate, metal and precast metal products, mining products (excluding coal mining), coke mining, refined petroleum, chemical products. Further details are provided in Appendix I enclosed Decree 94/2023/ND-CP.
2. Goods and services subject to excise duty. Further details are provided in Appendix II enclosed Decree 94/2023/ND-CP.
3. Information technology products and services as prescribed in the Law on information technology. Further details are provided in Appendix III enclosed Decree 94/2023/ND-CP

VAT on goods and services of a specific type mentioned above 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 Decree 94/2023/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 Decree 94/2023/ND-CP is not subject to VAT or is subject to 5% VAT in accordance with the Law on VAT, shall NOT be reduced and must pay VAT in accordance with the Law on VAT

2. REDUCTION OF VALUE ADDED TAX

Based on Clause 2, Article 1 of Decree 94/2023/ND-CP

1. For Businesses calculate VAT according to the Deduction method, VAT rate of 8% will be applied to goods and services specified in Clause 1, Article 1 of Decree 94/2023/ND -CP
2. For Business establishments (including business households and individuals) that calculate VAT by the Direct method (% of revenue), are entitled to a 20% reduction in the percentage to calculate VAT when issuing invoices. Application for goods and services eligible for VAT reduction according to the provisions of Clause 1, Article 1 of Decree 94/2023/ND-CP

3. INSTRUCTIONS FOR ISSUING INVOICES WITH 8% VAT ACCORDING TO DECREE 94/2023/ND-CP

1. Businesses calculate VAT according to the Deduction method

When issuing VAT invoices for goods and services eligible for VAT reduction, the seller shall write “8%” on the “VAT rate” line, VAT amount payable, and total amount payable by the buyer.

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

2. Business establishments (including business households and individuals) that calculate VAT by the Direct method (% of revenue)

When issuing invoices for goods and services eligible for VAT reduction, the business establishments shall write the full amount of the good or service before reduction in “Amount” column, the amount payable after reduction (by 20% of the rate (%) on revenue) on the “Total amount” line, and note “an amount of……., equivalent to 20% of the rate (%) used as the basis for calculating VAT, is reduced according to the Resolution No. 110/2023/QH15”