Decree 94/2023/ND-CP on value added tax reduction in Vietnam

On November 29, 2023, the National Assembly issued Resolution No. 110/2023/QH15 on the 6th Session of the 15th National Assembly, which includes the content of reducing value-added tax rates for several product groups. goods and services by the provisions of Resolution No. 43/2022/QH15 of the National Assembly on fiscal and monetary policies to support the socio-economic recovery and development program during the period from January 1, 2024, until June 30, 2024. On December 28, 2023, the Government issued Decree No. 94/2023/ND-CP stipulating the value added tax reduction policy according to Resolution No. 110/2023/QH15. By the time, the General Department of Taxation also issued Official Dispatch No. 12/CD-TCT on the implementation of this Decree to Tax Departments and taxpayers. This Decree regulates value added tax reduction from January 1, 2024, to June 30, 2024, for groups of goods and services that are currently subject to a 10% value added tax rate, except for some goods and services specified in the Decree.

Basic information of Decree 94/2023/ND-CP on value added tax reduction in Vietnam

Date of issue: December 28, 2023

Field: Tax – Fees – Fees, Business, Policy

Effective start date: January 1, 2024

Document type: Decree

Issuing agency: Government

Signed by: Le Minh Khai

Noteworthy information in Decree 94/2023/ND-CP on value added tax reduction in Vietnam

Goods and services are not subject to value added tax reduction

According to the provisions of Decree 94/2023/ND-CP, in the group subject that applied a tax rate of 10% as the current regulations, value added tax reduction will not be applied to the following groups of goods and services:

• Telecommunications, financial activities, banking, securities, insurance, real estate business, metals and fabricated metal products, mining products (not including coal mining), coke, oil refined mines, and chemical products. Details are in Appendix I issued with Decree 94/2023/ND-CP;
• Goods and services are subject to special consumption tax. Details are in Appendix II issued with Decree 94/2023/ND-CP;
• Information technology according to the law on information technology. Details are in Appendix III issued with Decree 94/2023/ND-CP ;

The value added tax reduction for each type of goods and services specified in Clause 1, Article 1 of Decree 94/2023/ND-CP is applied uniformly at all stages of import, production, processing, and business. commerce. Sold coal products (including cases where coal is then screened and classified according to a closed process before being sold) are subject to value-added tax reduction.

Coal products listed in Appendix I issued under Decree 94/2023/ND-CP, at stages other than mining and sold, are not subject to value added tax reduction.

In addition, in cases where goods and services are specified in Appendix I, II, III of Decree 94/2023/ND-CP, they are not subject to value added tax or are subject to value added tax of 5% according to the provisions of the Law on Value Added Tax 2008 will comply with the provisions of the Law on Value Added Tax 2008 and will not be reduced in value added tax.

Value added tax reduction

The value added tax reduction will be calculated as follows:

• Business establishments that calculate value-added tax using the deduction method may apply the 8% value-added tax rate for goods and services specified in Clause 1, Article 1 of Decree 94/2023/ND-CP;
• Business establishments (including business households and individual businesses) that calculate value-added tax using the percentage-on-revenue method are entitled to a 20% reduction in the percentage rate to calculate value-added tax when issuing invoices for goods and services eligible for value added tax reduction specified in Clause 1, Article 1 of Decree 94/2023/ND-CP.

Implementation order and procedures

For business establishments that calculate value-added tax using the deduction method, when making value-added invoices for providing goods and services subject to value-added tax reduction, at the value-added tax rate line. Add the following content and information:

• “8%”;
• Value added tax;
• Total amount the buyer must pay.

Based on the value-added invoice, business establishments selling goods and services declare output value-added tax, and business establishments purchasing goods and services declare input value-added tax deduction according to the reduced tax amount recorded on the value-added invoice.

For business establishments that calculate value-added tax using the percentage method on revenue, the percentage rate for calculating value-added tax when issuing invoices or when preparing supply sales invoices is reduced by 20%. Providing goods and services subject to value added tax reduction:

• In the “Amount” column, write the full amount of goods and services before reduction;
• In the line “Add money for goods and services” write down the number that has reduced the percentage of revenue by 20%, and also note “reduced … (amount) corresponding to the percentage to calculate added value tax according to Resolution No. 110/2023/QH15”.

Some other special cases are specified in the Decree

In the case of business establishments, as prescribed in Point a, Clause 2, Article 11 of Decree 94/2023/ND-CP, when selling goods or providing services, different tax rates are applied. The added value must clearly state the tax rate of each good and service as prescribed in Clause 3, Article 1 of Decree 94/2023/ND-CP.

In case a business establishment as prescribed in Point b, Clause 2, Article 1 of Decree 94/2023/ND-CP sells goods or provides services, the sales invoice must clearly state the reduced amount according to Clause 3, Article 1 of Decree 94/2023/ND-CP.

In cases where business establishments have issued invoices and declared according to the tax rate or percentage to calculate value added tax that has not been reduced according to the provisions of Decree 94/2023/ND-CP, the seller and the buyer process the invoices made according to the law on invoices and documents. Based on the invoice after processing, the seller declares output tax adjustments, and the buyer declares input tax adjustments (if any).

Guiding the implementation of Decree 94/2023/ND-CP

Ministries according to their functions and tasks and the People’s Committees of provinces and centrally run cities direct relevant agencies to deploy propaganda, guidance, inspection, and supervision so that consumers understand and benefit. Benefits from value added tax reduction specified in Article 1 of Decree 94/2023/ND-CP, which focuses on solutions to stabilize the supply and demand of goods and services subject to value added tax reduction to stabilize the market price level from January 1, 2024, to June 30, 2024.

In the process of implementing the contents specified in Decree 94/2023/ND-CP, if problems arise, the Ministry of Finance is responsible for guiding and resolving problems.

Ministers, Heads of ministerial-level agencies, Heads of Government agencies, Chairmen of People’s Committees of provinces, and relevant businesses, organizations, and individuals are responsible for implementing and promulgating Decree 94/2023/ND-CP.

Decree 94/2023/ND-CP takes effect from January 1, 2024, to June 30, 2024.

Above is an article related to Decree 94/2023/ND-CP regulating value added tax reduction policy according to Resolution No. 110/2023/QH15 of the National Assembly. If you have any problems or questions related to the content of the article, please contact Viet An Law Firm to receive the fastest and most timely support. Best regards!