Types of goods and services that are eligible for VAT reduction and non-reduction to 8% from July 1^st , 2023 based on legal regulations

Business establishments that pay VAT using the credit-invoice method shall pay 8% VAT for the following goods and services:

(1) 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 Decree 44/2023/ND-CP.

(2) Goods and services subject to excise tax. Further details are provided in Appendix II enclosed Decree 44/2023/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 44/2023/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 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 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.

VAT reduction for household businesses and individual businesses that pay VAT using the direct method (as a percentage (%) on revenue) based on Decree 44/2023/ND-CP

Business establishments (including household businesses and individual businesses) that pay VAT using the direct method (as a percentage (%) on revenue) shall be eligible for 20% reduction in the rate (%) used as the basis for calculating VAT when issuing invoices for the goods and services eligible for VAT reduction according to the above provisions.

Instructions for issuing VAT invoices at 8% according to Decree 44/2023/ND-CP

(1) Business establishments pay VAT using the credit-invoice method:

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

The good seller or service provider shall declare output VAT and the good buyer or service user shall declare and deduct input VAT according to the VAT amount written on the VAT invoice.

(2) Business establishments (including household businesses and individual businesses) that pay VAT using the direct method (as a percentage (%) on revenue):

When issuing sales 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. 101/2023/QH15”.