VINACHEM

From July 1, a reduced VAT rate of 8% will apply to most goods and services, helping to save costs and increase consumption.

On June 30, the Government issued Decree No. 72, regulating the policy of reducing VAT according to Resolution No. 142 of the National Assembly.

The decree specifies a reduction in VAT for goods and services currently subject to a 10% tax rate. However, sectors such as real estate, securities, banking services, telecommunications, information technology, coke, chemical products, and goods and services subject to special consumption tax are excluded from this tax reduction.

Key points of the Decree

- Scope of reduction: The VAT reduction applies uniformly across the stages of import, production, processing, and trading.

- Exclusions: Sectors like real estate, banking, and telecommunications are not eligible for the reduction.

- Coal products: Corporations and economic groups involved in closed processes before selling are also subject to the VAT reduction for coal products.

Implementation details

- Non-VAT or 5% VAT goods: Goods and services not subject to VAT or those subject to a 5% VAT rate will continue to follow the existing provisions of the Law on Value Added Tax and will not see a reduction.

- Deduction method: Business establishments calculating VAT via the deduction method will apply an 8% VAT rate to eligible goods and services.

- Revenue-based method: Business establishments, including households and individual businesses calculating VAT using the percentage method on revenue, will see a 20% reduction in VAT when issuing invoices for goods and services with reduced VAT.

On June 29, the National Assembly passed a resolution agreeing to extend the application of the 8% VAT rate, a 2% reduction from the current rate, until the end of this year.

Reducing VAT by 2% aims to help people save on expenses and living costs, providing a psychological boost to stimulate demand and increase consumption.  – VNN –