Continue to maintain the value-added tax (VAT) reduction policy in the second half of 2024  

Cover bulletin

The Vietnamese Government has recently issued Decree 72/2024/ND-CP regulating the value-added tax (VAT) reduction policy in the second half of 2024. 

Basically, Decree 72/2024/ND-CP has similar content to Decree No. 94/2023/ND-CP. The notable contents of this Decree are as follows:    

  • Validity period: from 2024/07/01 to 2024/12/31  
  • Goods and services eligible for tax reduction:  

Reduction of value-added tax (VAT) on goods and services subject to the tax rate of 10%. 

Explanation: Goods and services will be subject to 10% VAT when they are not subject to 5% tax, not subject to 0% tax and not subject to VAT.  

(According to Article 11 of Circular 219/2013/TT-BTC)  

  • Groups of goods and services not eligible for tax reduction:  
    • Telecommunications goods and services, financial activities, banking, securities, insurance, real estate business, metals and prefabricated metal products, mining products, coke, refined petroleum, chemical products – Details in Appendix I. 
    • Goods and services subject to excise tax – Details in Appendix II. 
    • Information technology goods and services – Details in Appendix III. 
  • Tax reduction:  
    • For enterprises calculating VAT by the deduction method: 2% reduction (from 10% >>8%). 
    • For enterprises calculating value-added tax by the percentage method of total turnover: 20% reduction in the percentage rate for tax calculation. 
  • Instructions for declaration on the VNACCS/VCIS system. 

To declare the 8% value-added tax (VAT) rate, enterprises select code VB225 in the information indicator box “Code for application of tax rates/other tax rates” on the import electronic declaration from 01/07/2024. 

Code VB225 does not apply to cases where goods are not subject to VAT or subject to VAT of 0%, 5%. 

(According to the guidance in Official Letter No. 3160/TCHQ-TXNK dated July 01, 2024) 

The Vietnamese Government’s continued maintenance of the 2% VAT reduction policy is expected to help businesses reduce production costs and lower costs, thereby contributing to improving the financial situation of businesses. 

Link: Decree 72/2024/ND-CP