On December 28, 2023, the Government issued Decree No. 94/2023/NĐ-CP on the VAT reduction policy in accordance with Resolution No. 110/2023/QH15. The Decree takes effect from January 1, 2024, until June 30, 2024.
Key highlights are as follows:
First, a 2% VAT reduction is applied to goods and services currently subject to the 10% VAT rate, excluding the following categories:
Telecommunications, financial activities, banking, securities, insurance, real estate business, metals and fabricated metal products, mining products (excluding coal mining), coke, refined petroleum, and chemical products.
Goods and services subject to special consumption tax.
- Information technology products and services as defined under the law on information technology.
- The VAT reduction specified in Clause 1, Article 1 of Decree 94/2023/NĐ-CP shall be uniformly applied across all stages: importation, production, processing, and commercial business. For coal sold after mining (including cases where coal is screened and classified under a closed process before sale), VAT reduction is applicable. However, coal items listed in Appendix I of the Decree, at stages other than direct sale after mining, are not eligible for VAT reduction.
- If the goods and services listed in Appendices I, II, and III of the Decree fall under non-taxable or 5% VAT according to the Law on VAT, then the applicable provisions of the Law on VAT shall prevail, and the VAT reduction under this Decree shall not apply.
Refer to Appendices I, II, and III attached to the Decree for details.
Second, regarding the procedures for implementing the 2024 VAT reduction:
The procedure is as follows:
For business establishments eligible for the 8% VAT rate, when issuing VAT invoices for goods and services subject to VAT reduction, the VAT rate line must state “8%”, along with the reduced VAT amount and the total amount payable by the buyer.
Based on the VAT invoice, the seller declares output VAT, and the buyer declares input VAT deduction according to the reduced tax amount specified on the invoice.
