Value-added tax (VAT) is a tax calculated on the added value of goods and secondary services arising from the production and circulation process, playing an extremely important role in balancing the government budget. water to provide for national construction and development activities. In the context of Vietnam’s economy being affected by complex developments in the world, the value-added tax (VAT) rate in 2023 has been undergoing many changes. Therefore, businesses trading all kinds of goods and services need to be continuously updated and clearly understood to avoid disadvantages during operations and tax declaration obligations.
- Law on Value Added Tax 2008, amended and supplemented in 2013, 2014, 2016.
- Resolution 43/2022/QH15 regulates tax exemption and reduction policies.
- Decree 15/2022 regulates tax exemption and reduction policies according to Resolution No. 43/2022/QH15 of the National Assembly on fiscal and monetary policies to support the socio-economic recovery and development program.
- Decree 41/2022 amends and supplements a number of articles of Regulation No. 123/2020/ND-CP regulating invoices and documents and Decree No. 15/2022/ND-CP stipulating exemption and reduction policies tax according to Resolution No. 43/2022/QH15 of the National Assembly on fiscal and monetary policies to support the socio-economic recovery and development program.
Value added taxpayers
Subjects obliged to pay value-added tax in Vietnam are organizations and individuals producing and trading goods and services in all industries and forms, except for subjects specified in Article 5 of the Law on Value Tax. increases in 2008, including:
- Business organizations are established and registered for business according to specialized business laws;
- Economic organizations of political organizations, socio-political organizations, social organizations, socio-professional organizations, people’s armed units, public service organizations and other organizations;
- Foreign-invested enterprises and foreign parties participating in business cooperation according to the Investment Law; Foreign organizations and individuals doing business in Vietnam but not establishing legal entities in Vietnam;
- Individuals, households, independent business groups, and other entities engaged in production, business, and import activities.
Value-added tax (VAT) rate in 2023
Group of goods and services applies the value-added tax rate of 0%
The tax rate of 0% applies to groups of exported goods and services, international transportation, and goods and services not subject to value-added tax when exported. However, the following cases, although included in this group of goods and services, are still subject to value-added tax:
- Technology transfer, intellectual property rights transfer abroad;
- Overseas reinsurance services;
- Credit granting services;
- Capital transfer;
- Derivative financial services;
- Postal and telecommunications services;
- Exported products are exploited resources and minerals that have not been processed into other products; Exported products are goods processed from natural resources and minerals with the total value of natural resources and minerals plus energy costs accounting for 51% or more of the product’s cost price.
Exported goods and services are goods and services consumed outside Vietnam, in non-tariff zones; goods and services provided to foreign customers according to Government regulations.
Conditions for applying 0% tax rate to exported goods
Pursuant to Clause 2, Article 9, Circular 219/2013/TT-BTC stipulates the conditions for applying the 0% value-added tax rate to exported goods in the following cases:
- Have a contract to sell or process exported goods; entrusted export contract;
- Have proof of payment for exported goods via bank and other documents as prescribed by law;
- Have a customs declaration according to legal regulations.
Particularly in the case of goods sold where the delivery and receipt point is outside Vietnam, the business establishment (seller) must have documents proving the delivery and receipt of goods outside Vietnam such as:
- Goods purchase contract signed with a foreign seller of goods;
- Goods sale contract signed with the buyer;
- Documents proving that goods were delivered or received outside Vietnam such as commercial invoice according to international practice, bill of lading, packing slip, and certificate of origin…;
- Bank payment documents include bank documents of the business establishment making payment to the seller of goods abroad; Payment documents via bank from the buyer of goods to pay the business establishment.
Group of goods and services applies the value-added tax rate of 5%
- Clean water for production and daily life;
- Ore to produce fertilizers, pesticides, and growth stimulants for animals and plants;
- Excavation and dredging services of canals, ditches, ponds, and lakes for agricultural production; cultivating, caring for, and preventing pests and diseases of plants; preliminary processing and preservation of agricultural products;
- Unprocessed crop, livestock, and aquatic products, except for crop, livestock, farmed, and caught aquatic products that have not been processed into other products or have only undergone normal preliminary processing by the organization, Individuals produce, catch, sell and import;
- Preliminarily processed rubber latex; Pre-processed resin; nets, ropes and yarn for weaving fishing nets;
- Fresh food; Unprocessed forest products, except wood, bamboo shoots, and products of cultivation, livestock, aquaculture, and fishing that have not been processed into other products or have only undergone normal preliminary processing by self-producing organizations and individuals. exporting, catching for sale, and importing;
- Road; by-products in sugar production, including molasses, bagasse, and sludge;
- Products made of jute, sedge, bamboo, leaves, straw, coconut shells, coconut skulls, water hyacinth and other handicraft products made with materials salvaged from agriculture; pre-processed cotton; newsprint;
- Medical equipment and tools; cotton, medical sanitary napkins; preventive and curative drugs; Pharmaceutical chemical products and medicinal materials are raw materials for the production of curative and preventive drugs;
- Teaching tools used for teaching and learning, including models, drawings, boards, chalk, rulers, compasses, and other types of equipment and tools specifically used for teaching, research, and scientific experiments;
- Cultural activities, exhibitions, physical training and sports; performing Arts; make a film; import, distribution and screening of films;
- Toys for children; Books of all kinds, except political books, textbooks, legal textbooks, scientific and technical books, and books printed in ethnic minority languages;
- Scientific and technological services according to the provisions of the Law on Science and Technology;
- Sell, rent, lease purchase social housing according to the provisions of the Housing Law.
Group of goods and services applies a value-added tax rate of 10%
Pursuant to Article 8 of the Law on Value Added Tax 2008, groups of goods and services that are not subject to tax rates of 0% and 5% will be subject to a value-added tax rate of 10%. This is considered the standard tax rate, applied to common goods and services.
Other notes about the value-added tax (VAT) rate in 2023
Because the policy of reducing the value-added tax to 8% according to Resolution 43/2022/QH15 and Decree 15/2022/ND-CP only applies until December 31, 2022, the value-added tax rate calculated Up to now (June 2023) it is implemented according to the Value Added Tax Law.
According to Official Dispatch 67/CST-GTGT in 2023 of the Director of the Tax Policy Department, it is proposed to reduce the value-added tax rate to 8% according to the following two options:
Option 1: Reduce the value-added tax rate by 2% for the group of goods and services subject to the 10% tax rate, meaning the tax rate is reduced to 8%.
Option 2: Apply the 8% value-added tax rate to groups of goods and services that are currently subject to a 10% tax rate, except for some groups of goods and services as applied in 2022 according to Resolution 43/2022/QH12 on fiscal and monetary policies to support the socio-economic recovery and development program.
Regarding the Draft Resolution proposing to reduce the value-added tax of the National Assembly for the group of goods and services that are applying a tax rate of 10% until the end of 2023, based on the dispatch announcing the Conclusion of the Standing Committee. The National Assembly Office believes that it will only propose to continue implementing the value-added tax reduction policy according to Resolution 43/2022/QH15. The expected time to apply the 2% value-added tax reduction starts from July 1, 2023, to December 31, 2023.
In addition, the Ministry of Finance also proposed a 20% reduction in the percentage to calculate VAT for business establishments (business households, individual businesses).
Customers who need advice on the types of taxes that individual business households need to pay, tax declaration advice, tax reporting service advice, and tax accounting services, please contact Viet An Tax Agent to Get the best support.