Legal documents newsletter for the week of July 10, 2024
THE GOVERNMENT EXTENDS 2% VALUE ADDED TAX REDUCTION UNTIL THE END OF 2024
On 30 June 2024, the Government has issued the Decree No. 72//2024/ND-CP (Decree 72) stipulating the value added tax reduction policy according to Resolution 142/2024/QH15 dated 29 June 2024 of the National Assembly.
Previously on 28 December 2023, the Government has issued the Decree 94/2023/ND-CP implementing a 2 percent VAT reduction on goods and services that were taxed at 10 percent VAT, with certain exceptions. This Decree included a comprehensive list of goods and services excluded from the 2 percent VAT reduction, detailing specific product codes and HS codes. This was to be effective from 01 January 2024 to 30 June 2024.
Decree 72 has extended this VAT reduction to the end of 2024 but does not expand the scope of goods and services eligible for the reduced tax rate.
Accordingly, the VAT reduction from 01 July 2024 to 31 December 2024 is as follows:
– Businesses applying VAT deduction method may apply the 8% VAT rate to goods and services currently subject to the 10% tax rate, except for the following groups of goods and services:
+ 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 with Decree 72.
+ Goods and services subject to excise tax. Further details are provided in Appendix II enclosed with Decree 72.
+ Information technology products and services as prescribed in the Law on information technology. Further details are provided in Appendix III enclosed with Decree 72.
+ VAT on goods and services of specific type as specified in Clause 1 of this Article shall be reduced consistently in 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 with Decree 72 are not eligible for VAT reduction in 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 herewith is not subject to VAT or is subject to 5% VAT in accordance with the Law on value-added tax 2008, VAT on that good or service shall be paid in accordance with the Law on value-added tax 2008 and shall not be reduced.
– Businesses (including business households and individual businesses) that calculate VAT according to the percentage method on revenue are entitled to a 20% reduction in the percentage rate to calculate VAT when issuing invoices on goods and services eligible for VAT reduction specified in Clause 1, Article 1 of Decree 72.