Decree 44/2023/ND-CP prescribing value-added tax reduction under Resolution 101/2023/QH15

On June 30, 2023, the Government officially issued Decree 44/2023/ND-CP stipulating the value-added tax reduction policy according to Resolution No. 101/2023/QH15 dated June 24, 2023 of the National Assembly. festival.

Full text of Decree 44/2023/ND-CP stipulating the value-added tax reduction policy

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Basic information of Decree 44/2023/ND-CP

The basic information about Decree 44/2023/ND-CP issued by the Government stipulating the contents of the new value-added tax reduction policy in 2023 includes:

Contents of value-added tax reduction policy according to Decree 44/2023/ND-CP

Subjects entitled to tax reduction

The value-added tax rate for groups of goods and services currently applying the 10% tax rate will be reduced to 8%, except for the following groups of goods and services:

• Telecommunications, financial operations, banking, insurance or real estate, metals and products manufactured from prefabricated metals, products of mining, coke, refined petroleum , chemical products, … specifically according to Appendix I, Decree 44/2023/ND-CP.
• Products and services are subject to special consumption tax, specifically according to Appendix III, Decree 44/2023/ND-CP.
• Information technology products according to the law on information technology, specifically in Appendix III, Decree 44/2023/ND-CP.

Accordingly, the subjects eligible for tax reduction under Decree 44/2023/ND-CP will include goods and services currently subject to the 10% value-added tax rate and are not in the group of goods and services specified in Clause 1 of this Article. Appendix I, II, III issued together with Decree 44/2023/ND-CP.

In addition, Decree 44/2023/ND-CP has renewed and added regulations on reducing value-added tax of 2% for coal products sold by corporations, real economic groups. implementing a closed process, specifically:

• For the sold coal products (including the case of coal mined and then screened, classified according to a closed process, then sold) subject to value-added tax reduction. Coal products listed in Appendix I issued together with Decree 44/2023/ND-CP are not eligible for value-added tax reduction at stages other than mining and sale. For corporations and economic groups that carry out a closed sale process, they are also subject to value-added tax reduction for sold coal products.

From the regulations on tax reduction policy, it can be seen that when reducing 2% VAT, the first and direct beneficiaries will be consumers. Because VAT is an indirect tax and is included in the selling price of products, goods and services. Therefore, when tax reduction is adjusted, the price of goods and services will also decrease, so that people can buy more goods and services with the same amount of money. Besides consumers, businesses also benefit because when people increase consumption (increase demand) will stimulate production enterprises (increase supply). In addition, VAT is an indirect tax and is collected through sellers, so when it is reduced from 10% to 8%, businesses will be able to reduce the capital spent to pay VAT at the input stages when buying raw materials. , fuel, materials and other inputs in a capital turnover cycle. This means that businesses will be able to save financial resources equivalent to 2% (equal to the tax reduction rate) of their total purchases. However, the tax reduction to stimulate shopping is not large when people tighten their spending due to the current economic context, and at the same time, small businesses are not too affected by the tax reduction compared to small businesses. big business.

List of goods and services not entitled to a 2% value-added tax reduction

In addition to the subjects entitled to a 2% tax reduction, Decree 44/2023/ND-CP stipulates the list of goods and services not eligible for value-added tax reduction in the attached Appendixes. Basically remain the same as the attached Annexes of Decree 15/2022/ND-CP and only change some HS codes to be consistent with HS codes according to the List of exported and imported goods of Vietnam issued by Vietnam. issued together with Circular 31/2022/TT-BTC dated June 8, 2022 of the Ministry of Finance.

Decree 44/2023/ND-CP amending the last notes on the List of goods and services in Appendix I and Appendix III to be consistent with the principle of goods classification according to the List of exported and imported goods. Vietnam, specifically:

• For the last note in Appendix I: HS code in column (10) is for reference only. The determination of HS codes for actually imported goods shall comply with the provisions on goods classification in the Customs Law and legal documents guiding the implementation of the Customs Law.
• For the final notes in Appendix III: HS codes in column (10) Part A and column (4) Part B This Appendix are for reference only. The determination of HS codes for actually imported goods shall comply with the provisions on goods classification in the Customs Law and legal documents guiding the implementation of the Customs Law.

tax reduction according to Decree 44/2023/ND-CP

The value-added tax reduction is specified in Decree 44/2023/ND-CP as follows:

• For business units and establishments that are calculating value-added tax by the deduction method, the value-added tax rate of 8% shall apply to the group of goods and services eligible for tax reduction under Decree No. decree 44.
• For business units, establishments and individuals that are calculating value-added tax according to the percentage method on turnover, a reduction of 20% of the percentage rate shall be applied to calculate value-added tax when implementing the value-added tax. issue invoices for groups of goods and services eligible for tax reduction under Decree 44.

In addition, Decree No. 44/2023/ND-CP also details some points to note about tax reduction policy as follows:

• For groups of goods and services that are not subject to tax or are subject to the tax rate of 5%, the application will continue to be applied under the previous Law on Value Added Tax, without value added tax reduction under the new tax reduction policy. year 2023.
• The value-added tax reduction under this policy will be applied uniformly at the stages of import, production, processing, business and trade.
• For coal products: Coal sold (including the case of coal mined and then screened and classified according to a closed process to be sold) is subject to a value-added tax reduction of 8%. Coal products with other stages (besides selling) listed in Appendix I are not eligible for tax reduction.

Tax reduction procedures

Tax reduction procedures are specified in Clause 3, Article 1, Decree 44/2023/ND-CP:
Business establishments falling into the categories specified at Point a, Clause 2, Article 1, Decree 44/2023/ ND-CP, when making a value-added invoice to sell goods and provide tax-reduced services, it is necessary to note the following:

• At the value-added tax rate line, write “8%” , value added tax, the total amount to be paid by the buyer.
• Based on the value-added invoice for the seller to declare output value-added tax, the buying business establishment declares and deducts input value-added tax according to the reduced tax amount on the invoice.

As for the business establishments specified at Point b, Clause 2, Article 1 of Decree 44/2023/ND-CP, when making a value-added invoice, the sale of goods and provision of services is entitled to a reduction. Taxes will need to note the following:

• In the column “Total money” write the full amount of goods and services before reducing.
• In the line “Adding money for goods and services”: Accountants write down 20% of the rate on revenue together with the note “Reduced… (amount) corresponding to 20% of the percentage rate for tax calculation. added value according to Resolution No. 101/2023/QH15”.

Invoice for 2% value-added tax reduction

Clause 5, Article 1 of Decree 44/2023/ND-CP amending instructions for making invoices:

• If the business establishment has issued invoices and declared at the tax rate or percentage to calculate the value added tax that has not been reduced as prescribed in Decree 44/2023/ND-CP, the seller and the purchase and process invoices made in accordance with the law on invoices and documents.
• Based on the invoice after processing, the seller declares and adjusts the output tax, and the buyer declares the adjustment of input tax (if any).

Decree 44/2020/ND-CP amends the instructions for making invoices to conform to the provisions of the law on invoices.

Notes on tax declaration for tax-reduced items

Decree 44/2023/ND-CP stipulates that in case a business establishment has issued an invoice and declared the value-added tax rate or the applicable percentage of value-added tax calculation at the rate that has not been reduced, the seller and the buyer handles the invoice in accordance with the law on invoices and documents. After processing, the invoice will be used as a basis for the seller to declare and adjust the output tax, and the buyer to declare and adjust the input tax (if any).

In addition, Decree 44/2023/ND-CP guides the declaration of goods and services eligible for value-added tax reduction according to Form No. 01, Appendix IV, issued together with the Decree together with the VAT declaration. increase.

If you need advice on value-added tax reduction policy and tax reduction procedures, please contact Viet An Law Firm for the best support.