VI Updating information and tax policies is also part of best protecting your rights. Reducing VAT by 2% in the first 6 months of 2025 for which goods and services according to the draft Resolution on VAT reduction? Through today’s article, let’s learn about this issue with Pham Consult!
Reducing VAT by 2% in the first 6 months of 2025 for which goods and services according to the draft Resolution on VAT reduction?
Recently, the National Assembly announced the draft Resolution on reducing value added tax (draft Resolution on reducing VAT by 2% from January 1, 2025 to June 30, 2025) Download.
Article 1 of the draft Resolution on reducing VAT by 2% from January 1, 2025 to June 30, 2025 for goods and services as follows:
Reduce the VAT rate by 2%, applicable to groups of goods and services currently subject to a tax rate of 10% (remaining at 8%), except for the following groups of goods and services: Telecommunications, information technology, financial activities, banking, securities, insurance, real estate business, metal production and production of prefabricated metal products, mining industry (excluding coal mining), coke production, refined petroleum, production of chemicals and chemical products, goods and services subject to special consumption tax.
How is the 2% VAT reduction until the end of 2024 according to Decree 72/2024/ND-CP?
Article 1 of Decree 72/2024/ND-CP stipulates a 2% VAT reduction until the end of 2024 as follows:
(1) Value added tax reduction for groups of goods and services currently subject to a tax rate of 10%, except for the following groups of goods and services:
– Telecommunications, financial activities, banking, securities, insurance, real estate business, metals and products from prefabricated metals, mining products (excluding coal mining), coke, refined petroleum, chemical products.
Details in Appendix I issued with Decree 72/2024/ND-CP Download
– Goods and services subject to special consumption tax.
Details in Appendix II issued with Decree 72/2024/ND-CP Download
– Information technology according to the law on information technology.
Details in Appendix III issued with Decree 72/2024/ND-CP Download
– The reduction of value added tax for each type of goods and services specified in (1) is applied uniformly at the stages of import, production, processing, and commercial business. For coal products sold (including coal mined and then screened and classified according to a closed process before being sold) are subject to value added tax reduction. Coal products in Appendix I issued with this Decree, at stages other than the stage of mining and selling, are not subject to value added tax reduction.
Corporations and economic groups that implement a closed process before selling are also subject to value added tax reduction for coal products sold.
In case the goods and services listed in Appendices I, II and III issued together with this Decree are not subject to value added tax or are subject to 5% value added tax according to the provisions of the Law on Value Added Tax, the provisions of the Law on Value Added Tax shall apply and no value added tax shall be reduced.
(2) Value added tax reduction rate:
– Business establishments calculating value added tax according to the deduction method shall apply the value added tax rate of 8% to goods and services specified in Clause 1, Article 1 of Decree 72/2024/ND-CP.
– Business establishments (including business households and business individuals) calculating value added tax according to the percentage method on revenue shall have the percentage rate reduced by 20% to calculate value added tax when issuing invoices for goods and services subject to value added tax reduction specified in Clause 1 of this Article.
(3) Implementation procedures
– For business establishments specified in Point a, Clause 2, Article 1 of Decree 72/2024/ND-CP, when making a value-added tax invoice to provide goods and services subject to value-added tax reduction, write “8%” in the value-added tax rate line; value-added tax amount; total amount the buyer must pay. Based on the value-added tax invoice, the business establishment selling goods and services declares output value-added tax, the business establishment purchasing goods and services declares input value-added tax deduction according to the reduced tax amount stated on the value-added tax invoice.
– For business establishments specified in Point b, Clause 2, Article 1 of Decree 72/2024/ND-CP, when making sales invoices for providing goods and services subject to value added tax reduction, in the “Total amount” column, fully record the amount of goods and services before reduction, in the “Total amount of goods and services” line, record the amount reduced by 20% of the percentage rate on revenue, and note: “reduced… (amount) corresponding to 20% of the percentage rate for tax calculation”
4) In case the business establishment as prescribed in Point a, Clause 2, Article 1 of Decree 72/2024/ND-CP applies different tax rates when selling goods and providing services, the value-added tax invoice must clearly state the tax rate of each goods and services as prescribed in (3).
In case the business establishment as prescribed in Point b, Clause 2, Article 1 of Decree 72/2024/ND-CP when selling goods and providing services, the sales invoice must clearly state the amount of reduction as prescribed in Clause 3 of this Article.
(5) In case the business establishment has issued an invoice and declared according to the tax rate or percentage to calculate value-added tax that has not been reduced as prescribed in Decree 72/2024/ND-CP, the seller and the buyer shall handle the issued invoice in accordance with the law on invoices and documents. Based on the invoice after processing, the seller declares the adjustment of output tax, the buyer declares the adjustment of input tax (if any).
(6) Business establishments specified in this Article shall declare goods and services eligible for VAT reduction according to Form No. 01 in Appendix IV issued with Decree 72/2024/ND-CP together with the VAT Declaration.
Who are the VAT payers?
Pursuant to Article 3 of Circular 219/2013/TT-BTC, VAT payers are organizations and individuals producing and trading in goods and services subject to VAT in Vietnam, regardless of industry, form, or business organization (hereinafter referred to as business establishments) and organizations and individuals importing goods and purchasing services from abroad subject to VAT (hereinafter referred to as importers), including:
– Business organizations established and registered for business under the Law on Enterprises, the Law on State-owned Enterprises (now the Law on Enterprises), the Law on Cooperatives and other specialized business laws;
– Economic organizations of political organizations, socio-political organizations, social organizations, socio-professional organizations, people’s armed forces units, public service organizations and other organizations;
– Enterprises with foreign investment capital and foreign parties participating in business cooperation under the Law on Foreign Investment in Vietnam (now the Investment Law); Foreign organizations and individuals conducting business in Vietnam but not establishing a legal entity in Vietnam;
– Individuals, households, groups of independent business people and other entities engaged in production, business and import activities;
– Organizations and individuals conducting production and business in Vietnam purchasing services (including cases of purchasing services associated with goods) from foreign organizations without a permanent establishment in Vietnam, individuals abroad who are non-residents in Vietnam, the organizations and individuals purchasing the services are taxpayers, except for cases where they are not required to declare and pay VAT as guided in Clause 2, Article 5 of Circular 219/2013/TT-BTC.
Regulations on permanent establishments and non-residents shall comply with the law on corporate income tax and the law on personal income tax.
– Branches of export processing enterprises are established to conduct trading activities of goods and activities directly related to trading of goods in Vietnam according to the provisions of law on industrial parks, export processing zones and economic zones.
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