Vietnam: VAT rate reduced to 8% in mid-2023

04 Jul 2023    1 minute read
Vietnam VAT reduction

In brief

On 24 June 2023, the National Assembly adopted Resolution No. 101/2023/QH15 for the fifth Session of its 15th Legislature ("Resolution 101"). To support socio-economic recovery efforts, under this Resolution, the National Assembly passed its policy reducing VAT to 8% for eligible goods and services in 2023 ("VAT Reduction Policy").

To implement the policy and provide detailed guidance, the Government issued Decree No. 44/2023/ND-CP on 30 June 2023 ("Decree 44"). The VAT Reduction Policy takes effect on 1 July 2023 and ends on 31 December 2023.
 

Contents

In more detail

According to Resolution 101 and Decree 44, the VAT Reduction Policy will be implemented as follows:

  • Goods and services currently subject to the VAT rate of 10% will benefit from a reduced VAT rate of 8%, effective from 1 July 2023 until 31 December 2023.
  • Similar to the VAT reduction policy implemented in 2022, the following three groups of goods and services are not entitled to the VAT Reduction Policy.

(i) Group 1: Telecommunications, financial activities, banking, securities, insurance, real estate business, metals and prefabricated products, mining products (excluding coal mining), coke coal, refined petroleum, chemical products (see Appendix I, attached to Decree 44, for details)
(ii) Group 2: Goods and services subject to special consumption tax (see Appendix II, attached to Decree 44, for details)
(iii) Group 3: Information technology under the information technology laws (see Appendix III, attached to Decree 44, for details)

Any 10% VAT-rated goods and services that do not fall within the three aforementioned groups qualify for the VAT Reduction Policy.

  • The VAT Reduction Policy is consistently applied at the import, production, processing, and trading stages.
  • Business units (including business households and business individuals) that adopt the VAT direct method are also permitted to enjoy this VAT Reduction Policy.
  • VAT invoices of business units adopting the VAT credit method must separately indicate the VAT rate of each good and service, including the VAT rate of 8% (if any).
Contact Information
Thanh Vinh Nguyen
Partner
Ho Chi Minh City
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thanhvinh.nguyen@bakermckenzie.com
Thi Thanh Hoa Dao
Special Counsel
Ho Chi Minh City
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thanhhoa.dao@bakermckenzie.com

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