In 2022, due to the impact of the pandemic and economic recession, the National Assembly passed Resolution 43/2022/QH15 to reduce Value Added Tax (VAT) from July 1, 2022, to December 31, 2022. In order to continue supporting businesses and promoting production and business activities in 2023, the National Assembly further issued Resolution 101/2023/QH15. On June 30, 2023, the Government officially issued Decree 44/2023/NĐ-CP ("Decree 44") providing guidelines for the VAT reduction according to Resolution 101 mentioned above.
1. Goods and services eligible for tax reduction:
Under the new regulations, goods, and services currently subject to a VAT rate of 10% will be eligible for a VAT reduction, except for the following:
a. Telecommunications, financial activities, banking, securities, insurance, real estate business, pre-cast metal, and metal products, mining products (excluding coal for sale), coke, refined petroleum, and chemical products.
b. Goods and services are subject to special consumption tax.
c. Information technology is governed by information technology laws.
2. Tax reduction rates:
a. For businesses applying the input tax credit method: a reduced VAT rate of 8% will be applicable to eligible goods and services.
b. For businesses (including individual businesses and household businesses) applying the percentage ratio on revenue method: a 20% reduction in the applicable percentage ratio will be applied to calculate VAT for eligible goods and services.
3. Effective period:
a. The VAT reduction will be applicable from July 1, 2023, until December 31, 2023.
b. In cases where businesses have issued invoices and declarations based on the unreduced VAT rate, they must create a record acknowledging the error, issue corresponding adjusted invoices, and deliver them to the buyers. Based on the processed invoices, the seller and buyer will adjust the corresponding taxes accordingly (if applicable).
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