GOVERNMENT EXTENDS VAT REDUCTION THROUGH 2024

The Government issued Decree 72/2024/ND-CP dated June 30, 2024 on the value-added tax (VAT) reduction as per Resolution 142/2024/QH15 dated June 29, 2024 of the lawmaking National Assembly.

Under the new decree, business facilities opting for the VAT discount method will enjoy a reduced VAT rate of 8% on eligible goods and services. Business entities, including business households and individual businesses, utilizing the revenue-based VAT calculation method will benefit from a 20% reduction in their VAT calculation percentage rate.

The VAT reduction applies to goods and services currently taxed at 10% VAT, with exceptions including telecommunications, financial and banking activities, securities, insurance, real estate, metals, mining products (excluding coal mining), coke, refined petroleum, certain chemicals as specified in Appendix I of the decree, products and services subject to special consumption tax listed in Appendix II, and information technology products and services outlined in Appendix III.

The VAT reduction for each type of goods and services is applied uniformly at all stages of import, production, processing and commercial trading. For sold coal products (including cases where coal is then screened and classified in a closed process before being sold) are subject to VAT reduction. Coal products included in Appendix I sold at stages other than the mining stage are not subject to VAT reduction.

Coal producers that apply a closed process before selling coal are also entitled to the VAT reduction on their coal sold.

In case goods and services listed in Appendices I, II and III are not subject to VAT or are subject to 5% VAT by the Law on VAT, they are governed by the Law on VAT and not subject to VAT reduction.

Decree 72/2024/ND-CP outlines specific protocols for VAT reduction. Businesses utilizing the VAT discount method must indicate "8%" on VAT rate lines, alongside the reduced VAT amount and the final payment due on invoices for eligible goods and services. Sellers declare reduced output VAT, while buyers declare input VAT based on these invoices.

For entities calculating VAT based on revenue percentages, invoices must reflect the original price of goods and services in the "Amount" column, with the reduced amount (after a 20% reduction) noted in the "Total amount" column. This adjustment is detailed as a 20% VAT reduction in compliance with Resolution 142/2024/QH15.

In addition, Decree 72/2024/ND-CP also clearly states: In case a business entity that uses the VAT discount method sells goods or provides services with different tax rates, it must clearly state the tax rate of each good sold and service provided on the VAT invoice. In case a business entity that calculates VAT on the percentage of revenue, it must clearly state the amount reduced on the goods sold or the services provided.

In case the business facility already made an invoice and declared the tax rate that has not been reduced as per this decree, the seller and buyer will handle the issued invoice according to laws on invoices and documents. Based on the handled invoice, the seller declares the revised output tax and the buyer declares the revised input tax (if any).

Decree 72/2024/ND-CP takes effect from July 1, 2024 to December 31, 2024.

Source: VCCI