On December 28, 2023, the Government issued Decree 94/2023/NĐ-CP to regulated the value added tax (“VAT”) reduction policy in accordance with Resolution 110/2023/QH15, which becomes effective from January 01, 2024 to June 30, 2024.
The 2024 VAT reduction policy, as per Decree 94/2023/NĐ-CP, includes the following provisions:
Firstly, VAT will be reduced by 2% for groups of goods and services currently taxed at 10%, with some exceptions:
- Telecommunications, financial activities, banking, securities, insurance, real estate business, metals and prefabricated metal products, mining products (excluding coal mining), coke, refined petroleum, chemical products.
- Products and services subject to special consumption tax.
- Information technology as per the law on information technology.
- The VAT reduction for each type of goods and services specified in Clause 1, Article 1 of Decree 94/2023/NĐ-CP is uniformly applied at all stages of import, production, processing, and commercial trading. Coal products sold (including cases of coal mining followed by screening and classification according to a closed process before being sold) are eligible for VAT reduction. However, coal products listed in Appendix I issued with Decree 94/2023/NĐ-CP are not eligible for VAT reduction at stages other than the sales stage.
- In the case of goods and services mentioned in Appendices I, II, and III issued with Decree 94/2023/ND-CP, if they are subject to non-value-added tax or subject to a 5% VAT as stipulated by the Value-Added Tax Law, they shall be implemented according to the provisions of the Value-Added Tax Law and are not allowed to reduce the value-added tax.
(The details of Appendices I, II, III are issued with this Decree)
Secondly, regarding the procedure for implementing the VAT reduction in 2024:
The procedure for implementing the VAT reduction is as follows:
For businesses subject to an 8% VAT rate, when issuing a value-added tax invoice for goods and services that are subject to VAT reduction, the invoice should state “8%” in the VAT rate line; the amount of value-added tax, and the total amount the buyer must pay.
Based on the value-added tax invoice, the business selling goods and services declares output VAT, while the business buying goods and services declares input VAT deduction according to the reduced tax amount stated on the value-added tax invoice.