2% VAT reduction from January 1, 2025

On December 31, 2024, the Government issued Decree No. 180/2024/ND-CP stipulating the policy of reducing value added tax according to Resolution No. 174/2024/QH15. Accordingly:

1. Reduce value added tax on groups of goods and services currently subject to a tax rate of 10%, 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 issued with Decree No. 180/2024/ND-CP.

- Goods and services subject to special consumption tax. Details in Appendix II issued with Decree No. 180/2024/ND-CP.

- Information technology according to the law on information technology. Details in Appendix III issued with Decree No. 180/2024/ND-CP.

- The reduction of value added tax for each type of goods and services mentioned above is applied uniformly at the stages of import, production, processing, and trading. For coal products sold (including coal mined and then screened and classified according to a closed process before being sold) are subject to value added tax reduction. Coal products listed in Appendix I issued with Decree No. 180/2024/ND-CP, at stages other than mining and selling, are not subject to value added tax reduction.

Corporations and economic groups that implement a closed process to sell are also subject to value-added tax reduction on coal products sold.

In case the goods and services listed in Appendices I, II and III issued together with Decree No. 180/2024/ND-CP are not subject to value added tax or are subject to 5% value added tax according to the provisions of the Law on Value Added Tax, the provisions of the Law on Value Added Tax shall apply and no value added tax reduction shall be granted.

2. Value added tax reduction:

a. Business establishments calculating value added tax according to the deduction method shall apply a value added tax rate of 8% to the above goods and services.

b. Business establishments (including business households and individual businesses) that calculate value added tax according to the percentage method on revenue are entitled to a 20% reduction in the percentage rate for calculating value added tax when issuing invoices for goods and services that are eligible for the above-mentioned value added tax reduction.

3. Implementation order and procedures:

- For business establishments specified in section a, when making a value-added tax invoice to provide goods and services subject to value-added tax reduction, write “8%” in the value-added tax rate line; value-added tax amount; total amount the buyer must pay. Based on the value-added tax invoice, the business establishment selling goods and services declares output value-added tax, the business establishment purchasing goods and services declares input value-added tax deduction according to the reduced tax amount stated on the value-added tax invoice.

- For business establishments specified in section b, when making sales invoices for providing goods and services subject to value added tax reduction, in the "Total amount" column, fully record the amount of goods and services before reduction, in the "Total amount of goods and services" line, record the amount reduced by 20% of the % rate on revenue, and note: "Reduced... (amount) corresponding to 20% of the % rate to calculate value added tax according to Resolution 174/2024/QH15".

In case the business establishment as prescribed in Section a applies different tax rates when selling goods and providing services, the value added tax invoice must clearly state the tax rate of each good and service as prescribed in Clause 3, Article 1 of Decree No. 180/2024/ND-CP.

In case the business establishment as prescribed in Section b sells goods or provides services, the sales invoice must clearly state the amount of discount as prescribed in Clause 3, Article 1 of Decree No. 180/2024/ND-CP.

In case the business establishment has issued an invoice and declared according to the tax rate or percentage to calculate value added tax that has not been reduced according to the provisions of Decree No. 180/2024/ND-CP, the seller and the buyer shall process the issued invoice according to the provisions of law on invoices and documents. Based on the invoice after processing, the seller shall declare and adjust the output tax, the buyer shall declare and adjust the input tax (if any).

Business establishments shall declare goods and services eligible for value added tax reduction according to Form No. 01 in Appendix IV issued with Decree 180/2024/ND-CP together with the Value Added Tax Declaration.

Decree No. 180/2024/ND-CP takes effect from January 1, 2025 to June 30, 2025.

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