In light of economic difficulties, the National Assembly passed Resolution 142/2024/QH15 to extend the application of the 8% VAT rate, which means a 2% reduction, from July 1, 2024, to the end of 2024 (“Resolution 142”). Consequently, on June 30, 2024, the Government issued Decree 72/2024/ND-CP detailing the VAT reduction policy under Resolution 142 (“Decree 72”). Generally, the provisions in Decree 72 are similar to those in Decree 94/2023/ND-CP, which applied the VAT reduction from January 1, 2024, to June 30, 2024 (“Decree 94”).
Below are some noteworthy points in Decree 72:
1. Eligible Entities for VAT Reduction:
The 2% VAT reduction will continue to apply to groups of goods and services currently subject to the 10% VAT rate (down to 8%), excluding the following groups:
- Telecommunications, financial activities, banking, securities, insurance, real estate business, metals, and fabricated metal products, mining products (excluding coal mining), coke, refined petroleum products, and chemical products.
- Goods and services are subject to excise tax.
- Information technology products as defined by IT laws.
2. VAT Reduction Rates:
- For businesses calculating VAT using the credit-invoice method: the 8% VAT rate applies to eligible goods and services.
- For businesses (household businesses and individual businesses) calculating VAT based on a percentage of revenue: a 20% reduction in the percentage rate used to calculate VAT when issuing invoices for eligible goods and services.
3. Duration of VAT Reduction:
The VAT reduction will continue to be implemented from July 1, 2024, to December 31, 2024.
4. Changes in VAT Reduction Declaration Forms:
- Forms under Decree 94 required only the declaration of the value of goods and services, VAT rates before and after reduction, and the reduced VAT amount without clearly distinguishing between input and output goods and services.
- Forms under Decree 72 have been amended and supplemented to separate input and output goods and services clearly; provide more detailed requirements for input goods and services eligible for VAT deduction, and add a section for calculating the difference between VAT on input and output goods and services.
Decree 72 is effective from July 1, 2024, to December 31, 2024.
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