Goods and Services Eligible for VAT Reduction
The Decree outlines a reduction in the VAT rate for goods and services currently subject to a 10% tax rate. However, the following categories are excluded from this reduction:
- Telecommunications and Financial Services: Includes banking, securities, and insurance.
- Specific Goods: Metals, ready-made metal products, mining products (excluding coal mining), coke, refined petroleum, and chemical products. Refer to Annex I for details.
- Special Consumption Products and Services: As specified in Appendix II of the Decree.
- Information Technology Services: Defined by the Law on Information Technology and detailed in Appendix III.
Scope of VAT Reduction
The reduction applies across the supply chain for eligible goods and services, from importation to sale. Notably:
- Coal Products: Coal sold post-extraction is eligible for the VAT reduction, except for those listed in Annex I, which are excluded beyond the extraction stage.
- Closed-Loop Processes: State corporations and economic groups using closed-loop processes for mined coal sales can benefit from the reduced VAT rate.
For goods and services specified in Annexes I, II, and III, where VAT is either exempt or subject to a 5% rate under the VAT Law, the provisions of the VAT Law prevail, and no additional reduction is granted.
Reduced VAT Rates
The Decree specifies the following reduced rates:
- Deduction Method: Businesses calculating VAT using the deduction method shall apply an 8% VAT rate to eligible goods and services.
- Percentage of Turnover Method: Businesses, including households and individual enterprises, shall reduce the applicable percentage by 20% when issuing invoices for goods and services subject to the reduced VAT rate.
Background on the Policy
The VAT reduction policy aligns with Resolution No. 174/2024/QH15, passed on November 30, 2024, during the 8th session of the 15th National Assembly. It extends the 2% VAT reduction first introduced in Resolution No. 43/2022/QH15, supporting Vietnam’s socio-economic recovery and development.
Conclusion
The VAT reduction policy aims to ease financial burdens on businesses and boost economic recovery. Businesses are encouraged to review Decree No. 180/2024/ND-CP to understand eligibility and implementation details.
Source: https://baochinhphu.vn/
