From July 1st, 2024, businesses will officially continue to apply the policy of reducing the VAT rate to 8% according to Decree 72/2024/ND-CP issued by the Government following Resolution 142/2024/QH15 dated June 29th, 2024 of the National Assembly. The following are the points businesses need to know to apply this policy.
Continue to reduce VAT on groups of goods and services currently subject to a 10% tax rate (except for a few specific groups).
Industry sectors eligible for VAT reduction
According to Decree 72/2024/ND-CP, from July 1st, the policy of reducing value-added tax to 8% will be applied to groups of goods and services currently subject to a 10% tax rate, except for the following groups of goods and services:
- Telecommunications, financial activities, banking, securities, insurance, real estate business, metals and prefabricated metal products, mining products (excluding coal mining), coke, refined petroleum, chemical products. Details in Appendix I.
- Goods and services subject to excise tax. Details can be found in Appendix II.
- Information technology as defined by the law on information technology. Details can be found in Appendix III.
VAT reduction rate
- Businesses that calculate value-added tax using the deduction method are subject to a value-added tax rate of 8%.
- Business establishments (including business households and business individuals) that calculate value-added tax by the method of percentage on revenue are entitled to a reduction of 20% of the percentage rate to calculate value-added tax when issuing invoices for goods and services eligible for value-added tax reduction.
Subjects and timeframe for applying the VAT reduction policy.
Period of application for VAT reduction: From February 01, 07 to December 2024, 31.
→ The reduction in value-added tax for each type of goods and services mentioned above is applied uniformly across all agencies. import, production, processing, and commercial trading stages.
Overall, the application of the VAT reduction policy for the last six months of 2024 under Decree 72/2024/ND-CP is not significantly different from the application of the VAT reduction policy under Decree 94/2023/ND-CP in the first six months of 2024.
Goods and services not eligible for VAT reduction.
Goods and services listed in Appendices I, II, and III, if not subject to VAT or subject to a 5% VAT rate under the VAT Law, will not be eligible for VAT reduction.
Refer directly to Appendices I, II, and III. Decree 72/2024/ND-CP here.
Or view the original PDF file.
- PDF file Appendix I issued with Decree 72/2024/ND-CP: Appendix I issued together with Decree 72/2024/ND-CP
- PDF file Appendix II issued with Decree 72/2024/ND-CP: Appendix II issued together with Decree 72/2024/ND-CP
- PDF file Appendix III issued with Decree 72/2024/ND-CP: Appendix III issued together with Decree 72/2024/ND-CP
How to determine which items are eligible for a reduced VAT rate of 8%.
→ Case 1: If the entity already knows the industry code for the goods and services requiring invoices:
If the product's industry code is listed in one of the three appendices above and is not subject to the 5% VAT rate or is exempt from VAT, the entity is eligible for a tax reduction from 10% to 8%.
→ Case 2: If the unit does not know the industry code for the goods and services that require invoices.
- Step 1: Look up the corresponding commodity code for the names of the goods and services at Classification and content of the Vietnamese product classification system (Issued together with Decision No. 43/2018/QD-TTg dated November 1, 2018 of the Prime Minister)
- Step 2: After identifying your product code, compare it with Appendices I, II, and III, similar to what was described in Case 1.
Sequence and procedures for implementing the VAT reduction policy.
→ The method of recording on invoices for businesses calculating VAT using the deduction method, applying an 8% VAT rate to specified goods and services:
- When issuing a value-added tax (VAT) invoice for goods and services subject to VAT reduction, the VAT rate line should state "8%"; VAT amount; and the total amount payable by the buyer. Based on the VAT invoice, the business selling the goods and services declares output VAT, and the business purchasing the goods and services declares input VAT deduction based on the reduced VAT amount recorded on the VAT invoice.
- In cases where goods are sold or services are provided subject to different tax rates, the value-added tax invoice must clearly state the tax rate for each item of goods or service as prescribed in Clause 3 of this Article.
→ How to record on invoices for business establishments (including household businesses and individual businesses) calculating value-added tax using the percentage-based method on revenue:
- When issuing sales invoices for goods and services subject to value-added tax reduction, in the "Total Amount" column, record the full amount of goods and services before the reduction. In the "Total Amount of Goods and Services" line, record the amount after the 20% reduction in revenue, and add a note: "Reduced… (amount) corresponding to 20% of the percentage rate for calculating value-added tax according to Resolution No. 142/2024/QH15".
- When selling goods or providing services, the unit must clearly state the amount of the discount as mentioned above on the sales invoice.
→ How to make adjustments to invoices already issued:
In case the business establishment has issued an invoice and declared the tax rate or percentage to calculate value added tax that has not been reduced according to the provisions of this Decree, the seller and buyer will process the invoice. prepared according to legal regulations on invoices and documents. Based on the invoice after processing, the seller declares output tax adjustments, and the buyer declares input tax adjustments (if any).
→ Additional regulations for filing VAT returns on a monthly/quarterly basis.
Businesses regulated under this Article shall declare goods and services eligible for value-added tax reduction using Form No. 01 in Appendix IV issued with this Decree, together with the Value-Added Tax Declaration Form.
If your business is experiencing the issues mentioned above, contact us today for advice and effective solutions!