In response to the economic difficulties, the National Assembly has decided to continue the value-added tax (VAT) reduction policy that has been in effect since 2022. Specifically, on November 29, 2023, the National Assembly issued Resolution No. 110/2023/QH15, which includes a content to reduce the VAT rate for groups of goods and services specified in point a, clause 1.1, Article 3 of Resolution No. 43/2022/QH15 of the National Assembly on financial policies, monetary support for the Program of Economic and Social Recovery and Development during the period from January 1, 2024, to June 30, 2024.
Accordingly, on December 28, 2023, the Government issued Decree No. 94/2023/NĐ-CP, which regulates the VAT reduction policy according to Resolution No. 110/2023/QH15 of the National Assembly ("Decree 94").
1. Maintaining the groups of goods and services eligible for tax reduction
The VAT reduction will continue to be implemented from January 1, 2024, to June 30, 2024. The 2% reduction in the VAT rate will continue to apply to groups of goods and services currently subject to a 10% tax rate (reduced to 8%).
The 8% tax rate will not apply to certain groups of goods and services, including telecommunications, information technology, financial activities, banking, securities, insurance, real estate business, metal production, and the production of finished metal products, mining (excluding coal mining), coke production, refined petroleum, chemical production, and chemical products, as well as special consumption tax on certain goods and services.
2. Maintaining the existing VAT reduction rate
Businesses calculate VAT using the deduction method, applying an 8% VAT rate to specified goods and services.
Businesses (including individual businesses and households engaged in business) calculate VAT using the percentage method on revenue reduced by 20% of the percentage used to calculate VAT when issuing invoices for goods and services eligible for VAT reduction.
Decree 94 takes effect from January 1, 2024, to June 30, 2024.
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