Officially reduce VAT by 2% in the first 6 months of 2025

On November 30, 2024, the National Assembly passed Resolution 174/2024/QH15 on the 8th Session of the 15th National Assembly, which included content related to reducing VAT by 2% in the first 6 months of 2025.

1. Officially reduce VAT by 2% in the first 6 months of 2025

Accordingly, the National Assembly agreed to continue reducing the VAT rate by 2% for groups of goods and services specified in Point a, Section 1.1, Clause 1, Article 3 of Resolution 43/2022/QH15 of the National Assembly on fiscal and monetary policies to support the Socio-economic Recovery and Development Program from January 1, 2025 to the end of June 30, 2025.

Article 3. Support policies for the Socio-Economic Recovery and Development Program

1. Fiscal policy:

1.1. Tax exemption and reduction policy:

a) Reduce 2% of the value added tax rate in 2022, applicable to groups of goods and services currently subject to a value added tax rate of 10% (remaining 8%), except for the following groups of goods and services: telecommunications, information technology, financial activities, banking, securities, insurance, real estate business, metals, prefabricated metal products, mining products (excluding coal mining), coke, refined petroleum, chemical products, goods and services subject to special consumption tax;

At the same time, the Government is assigned to organize the implementation and take responsibility for ensuring the collection task and the ability to balance the state budget in 2025 as decided by the National Assembly; immediately terminate the validity of the VAT exemption regulation in Decision 78/2010/QD-TTg of the Prime Minister, creating a basis for tax authorities to have a legal basis and sanctions for tax collection management for foreign e-commerce platforms selling goods to Vietnam.

Thus, according to Resolution 174/2024/QH15, the National Assembly has agreed to continue implementing a 2% reduction in VAT from January 1, 2025 to June 30, 2025.

 


Vietnam Notifies 2% VAT Reduction till End of June 2025

2. Update on Draft Decree on 2% VAT reduction from January 1, 2025 to June 30, 2025

It is known that the Ministry of Finance has also updated the Draft Decree to reduce VAT by 2% from January 1, 2025 to June 30, 2025 (Draft No. 3).

Specifically, the content of the draft Decree is based on inheriting all the contents stipulated in Decree 72/2024/ND-CP dated June 30, 2024 of the Government.

Accordingly, the Ministry of Finance proposes to reduce VAT on groups of goods and services currently applying a tax rate of 10%, except for the following groups of goods and services:

  • Telecommunications, financial activities, banking, securities, insurance, real estate business, metals and products from prefabricated metals, mining products (excluding coal mining), coke, refined petroleum, chemical products. Details are in Appendix I issued with this Draft Decree.
  • Goods and services subject to special consumption tax. Details are in Appendix II issued with this Draft Decree.
  • Information technology according to the law on information technology. Details are in Appendix III issued with this Draft Decree.
  • The reduction of value added tax for each type of goods and services mentioned above is applied uniformly at the stages of import, production, processing, and commercial business.

For coal products sold (including coal mined and then screened and classified according to a closed process before being sold) are subject to value added tax reduction. Coal products in Appendix I issued with this Draft Decree, at stages other than the stage of mining and selling, are not subject to value added tax reduction.

The 2% VAT reduction is considered one of the important measures to support businesses

Corporations and economic groups that implement a closed process before being sold are also subject to value added tax reduction for coal products sold.

In case the goods and services listed in Appendices I, II and III issued together with this Draft Decree are not subject to value added tax or are subject to 5% value added tax according to the provisions of the Law on Value Added Tax, the provisions of the Law on Value Added Tax shall apply and no value added tax shall be reduced.

The 2% VAT reduction is considered one of the important measures to support businesses and promote economic growth in the context of many market difficulties. Businesses need to closely monitor changes in the draft Decree and be ready to apply the new policy from the beginning of 2025.

To understand more detailed information and the latest updates on this Decree, businesses can refer to the guidance documents from the Ministry of Finance or attend specialized conferences to receive direct advice from experts in the field of tax and finance.

Hopefully this article from S4B Vietnam will help business accountants grasp important information about the VAT reduction policy and how to apply it in their businesses.
If you have any questions or need support with tax and accounting service, please do not hesitate to contact us!

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