What are the policies to support VAT reduction?
Reducing value-added tax (VAT) is one of the government's support policies that people are particularly interested in.
The government has issued Decree 44/2023/ND-CP, which stipulates a reduction in VAT for groups of goods and services currently subject to a 10% tax rate to 8%, except for groups of goods and services as specified.
Regarding VAT reductions, according to Decree 44, corresponding to the two methods of calculating VAT, the VAT reduction levels are stipulated as follows:
- Businesses that calculate VAT using the deduction method: Are allowed to apply an 8% VAT rate to goods and services subject to a 10% tax rate (except for certain goods and services).
- Businesses (including household businesses and individual businesses) that calculate VAT using the percentage-based method on revenue: Are entitled to a 20% reduction in the percentage rate used to calculate VAT when issuing invoices for goods and services eligible for tax reduction.
Renting out properties is a type of real estate business activity and therefore is not eligible for VAT reduction. (Photo: Xuan Tien)
Is there a VAT reduction for land leases?
According to Decree 44/2023/ND-CP, land leasing activities are not eligible for VAT reduction.
Specifically, according to Article 4 of the Law on Real Estate Business, real estate business is the act of investing capital to create, purchase, receive transfers, lease, or lease-purchase real estate for the purpose of selling, transferring, leasing, subleasing, or lease-purchasing for profit.
Furthermore, Article 174 of the 2015 Civil Code defines real estate as assets including: land; houses and construction works attached to the land, including assets attached to those houses and construction works...
Thus, land leasing is defined as one of the real estate business activities.
On the other hand, Decree 44/2023/ND-CP stipulates a reduction in VAT for groups of goods and services currently subject to a 10% tax rate to 8%, except for the following groups of goods and services:
- Telecommunications, financial activities, banking, securities, insurance, real estate business, metals and prefabricated metal products, mining products (excluding coal mining), coke, refined petroleum, chemical products - Details in Appendix I of this Decree.
- Products and services subject to excise tax: Cigarettes, cigars, alcohol, beer, automobiles with fewer than 24 seats, two-wheeled and three-wheeled motorcycles with engine capacities exceeding 125 cm3, aircraft, yachts, various types of gasoline, etc.
- Information technology according to the law on information technology: Sound cards, video cards, network cards and similar types of cards used for automatic data processing machines, smart cards, computers and computer peripherals...
Therefore, land leasing does not fall under the cases eligible for VAT reduction according to Decree 44/2023/ND-CP.
CHAU THU
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