SALES before 1 July 2023, which VAT rate to be applied, 8% or 10%?

The Vietnam Government officially promulgated Decree No. 44/2023/ND-CP on VAT reduction under Resolution No. 101/2023/QH15 on 30 June 2023. According to the Decree, the VAT reduction is applied from July 01, 2023, to the end of December 31, 2023, for most of the goods/services except for those specific in Appendix I, II, and III of the Decree.

While waiting for the Ministry of Finance to guide tax reduction regulations under Decree 44/2023/ND-CP, to resolve any arising case related to invoice issuance from 1 July 2023, the taxpayer is allowed to temporarily apply the guidance issued in 2022 by the Ministry of Finance and the General Department of Taxation (specific in Official Letter No. 2688/BTC-TCT dated 23 February 2022 and Official Letter No. 3522/TCT-CS dated 22 September 2022), i.e.

1. In case the goods/services provision is subjected to a VAT rate reduction and the buyer accepts to settle the payment from July to December 2023, the seller is allowed to apply the VAT rate of 8%.

In case the goods/services provided in June 2023 but the invoice only being issued in July 2023, it is not subjected to a 2% VAT reduction and must be issued under 10%.

2. In case there is a mistake detected for the invoices issued for goods/services provided from January to June 2023, the adjustment invoices issued from July to December 2023 are not entitled to a reduced rate of 8%.

3. For prepayment service and/or payment collection during the service provision, in case the completion falls from July 2023 to December 2023, the invoice issued for the remaining payment is allowed to apply the rate of 8%.

We will update you as soon as there is official guidance from the Ministry of Finance.

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