From January 1st, 2025, businesses will officially continue to apply the policy of reducing the VAT rate to 8% according to Decree 180/2024/ND-CP issued by the Government following Resolution 174/2024/QH15 dated January 30th, 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 180/2024/ND-CP, from January 1, 2025, 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 in accordance with 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%.
Businesses (including household businesses and individual businesses) that calculate value-added tax (VAT) using the percentage-based method on revenue are entitled to a 20% reduction in the percentage rate used to calculate VAT when issuing invoices for goods and services eligible for VAT reduction.
Subjects and timeframe for applying the VAT reduction policy.
Period of application for VAT reduction: From February 01, 01 to December 2025, 30.
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 first six months of 2025 under Decree 180/2024/ND-CP is not significantly different from the application of the VAT reduction policy under Decree 72/2024/ND-CP for the last 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.
You can directly access Appendices I, II, and III of Decree 180/2024/ND-CP here.
Or view the original PDF file:
- PDF file of Appendix I issued with Decree 180/2024/ND-CP: Appendix I issued with Decree 180/2024/ND-CP.
- PDF file of Appendix II issued with Decree 180/2024/ND-CP: Appendix II issued with Decree 180/2024/ND-CP.
- PDF file Appendix III issued with Decree 180/2024/ND-CP: Appendix III issued with Decree 180/2024/ND-CP.
How to determine which items are eligible for a reduced VAT rate of 8%.
Case 1: If the unit already knows the industry codes for the goods and services that require invoicing:
If the product's industry code is listed in one of the three appendices above and is not subject to the 5% VAT 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 invoicing.
- 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.
Instructions on how to record on invoices for businesses (including household businesses and individual businesses) that calculate 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 that have already been 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 monthly/quarterly VAT returns:
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.
The policy of reducing the value-added tax (VAT) from 10% to 8% in Vietnam is implemented in the following specific stages:
- From 01/02/2022 to 31/12/2022According to Resolution 43/2022/QH15 and Decree 15/2022/ND-CP.
- From 01/07/2023 to 31/12/2023According to Resolution 101/2023/QH15 and Decree 44/2023/ND-CP.
- From 01/01/2024 to 30/06/2024According to Decree 94/2023/ND-CP.
- From 01/07/2024 to 31/12/2024According to Resolution 142/2024/QH15 and Decree 72/2024/ND-CP.
- From 01/01/2025 to 30/06/2025According to Resolution 174/2024/QH15 and Decree 180/2024/ND-CP.
Note: This policy applies to goods and services subject to a 10% tax rate, excluding certain sectors such as telecommunications, finance, real estate, and goods subject to excise tax.