The Vietnamese Government has recently issued a Decree that maintains the 2% reduction in value-added tax (VAT) for goods and services until the end of the year. This policy is intended to help businesses and individuals cope with ongoing economic challenges globally.
However, certain sectors such as telecommunications, finance, securities, insurance, and real estate services, along with specific products like metals, mining products, and information technology, will not be eligible for this tax reduction.
The VCCI had previously proposed a 2% reduction in VAT for all goods and services. However, challenges arose in determining which goods would qualify for a reduced 8% tax rate. Clarity is important for businesses navigating these tax regulations.
The VAT reduction applies uniformly across all stages of import, production, processing, and commercial business. Different tax rates for various goods and services must be clearly stated on VAT invoices. Businesses using the percentage method for tax calculation will receive a 20% reduction in the tax percentage when issuing invoices.
The VAT reduction benefits both businesses and consumers as the tax burden is shared. Extending the 2% tax reduction period for another six months is expected to reduce budget revenue by approximately 24,000 billion VND in the second half of the year, totaling nearly 47,500 billion VND for the whole year.
Overall, the VAT reduction policy aims to alleviate economic pressures and provide support during these challenging times by reducing budget revenue by approximately 24 billion VND in the second half of the year while benefiting both businesses and consumers as well as providing clarity to navigate through these complex tax regulations.
