[New] Apply 2% VAT reduction until the end of 2024

On the morning of June 13, under the direction of Vice Chairman of the National Assembly Nguyen Duc Hai, the National Assembly Standing Committee agreed to submit to the National Assembly a 2% reduction in value added tax from now until the end of 2024 for some number of groups of goods and services.

1. Is it correct to reduce VAT by 2% until December 31, 2024?

According to the latest information from Government Information, the Government has just submitted to the National Assembly Proposal 177/TTr-CP on the results of reducing the VAT rate by 2%.

At the same time, the Government also proposes to continue reducing VAT by 2% for groups of goods and services that are currently subject to a tax rate of 10% in the last 6 months of 2024, i.e. from July 1, 2024 – the end of July 31. December 2024, following the current VAT reduction deadline of June 30, 2024.

Recently, the Ministry of Finance officially issued a draft Resolution to reduce value added tax from July 1, 2024 to December 31, 2024. This tax reduction will apply to the following industries:

Reduction of 2% value-added tax rate, applicable to groups of goods and services currently applying the tax rate of 10% (to 8%), except for some of the following groups of goods and services: Telecommunications, information technology, financial activities, banking, securities, insurance, real estate business, metal production and production of prefabricated metal products, mining industry (excluding coal mining) , production of coke, refined petroleum, production of chemicals and chemical products, goods and services subject to special consumption tax.

 


Vietnam Decree 72/2024 Notifies 2% VAT Reduction till End of 2024

The Ministry of Finance said that the construction of the National Assembly Resolution project on reducing value added tax by 2% aims to stimulate consumption, in accordance with the current economic context, thereby promoting manufacturing activities. Business and exports will soon recover and develop to contribute back to the state budget as well as the economy to implement the 5-year socio-economic development plan 2021 – 2025, economic development plan. Annual socio-economic, Economic restructuring plan for the period 2021 – 2025.

The reason for choosing this solution is: The current VAT law stipulates 02 VAT rates of 5% and 10% (excluding the 0% rate applied to exported goods and services; subjects are not subject to tax). Tax amount payable = output VAT amount – input VAT amount.

Goods and services purchased from business establishments are subject to tax rates of 10%, 5% or are not subject to VAT. Therefore, for goods and services subject to 5% VAT, the output VAT amount is basically smaller than the input VAT amount, so business establishments usually do not incur VAT payable. For goods and services subject to 10% VAT, the amount of VAT payable will arise (output VAT is greater than input VAT).

2. What is the current 2% VAT reduction policy?

Currently, the value added tax reduction policy is being issued by the Government in Decree 94/2023/ND-CP. Accordingly, this policy is as follows:

– VAT reduction of 2% for groups of goods and services currently subject to a 10% tax rate.
– The following groups of goods and services will not receive a 2% discount:

  • Telecommunications, financial activities, banking, securities, insurance, real estate trading, metals, fabricated metal products, mining products but excluding coal, coke, oil mining
  • Refined mines, chemical products.
  • All types of goods and services are subject to special consumption tax.
  • Information technology.

– Uniformly apply the 2% VAT reduction at all stages of import, production, processing, and commercial business. As for coal mined and sold items, only Appendix I is subject to tax reduction. Other stages besides the mining and selling stage are not subject to VAT reduction.

NA agrees to extend 2% VAT reduction to the end of 2024

– Value added tax reduction:

  • With deduction method: 2% reduction, equivalent to 8% value added tax.
  • With the tax calculation method based on percentage of revenue: 20% reduction in percentage to calculate VAT when issuing invoices.

– Procedures for tax reduction:
+ For business establishments, calculate VAT according to the deduction method

  • When making an invoice, in the line “value added tax rate”, this business establishment writes “8%”…
  • Based on the value-added invoice, the seller declares output VAT, the buyer deducts input VAT according to the reduced tax amount recorded on the value-added invoice.

+ For business establishments that calculate VAT using the percentage method: When making sales invoices, business and service establishments subject to VAT reduction write as follows:

  • Record the full amount of goods and services before reduction in the “to amount” column.
  • Record in numbers a 20% reduction in the percentage of revenue in the line “plus money for goods and services”.

Note: “Reduced… (amount) corresponding to 20% of the percentage to calculate value added tax.

Above is all the latest information on the issue: Is it true to reduce VAT by 2% until December 31, 2024? For the fastest updates on tax and accounting legal documents, readers are invited to visit the S4B Vietnam website every day. If you still have problems, please contact our hotline for support.

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