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:
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- 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.
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- Goods and services subject to excise tax – Details in Appendix II.
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- Information technology goods and services – Details in Appendix III.
- Tax reduction:
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- For enterprises calculating VAT by the deduction method: 2% reduction (from 10% >>8%).
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- 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