VAT reduction: Helping businesses recover.

Báo Thái Nguyên•07/07/2023

On June 30th, the Government issued Decree No. 44/2023 (hereinafter referred to as Decree No. 44) stipulating the policy of reducing value-added tax (VAT) in accordance with Resolution No. 101/2023 of the National Assembly, effective from July 1st to December 31st, 2023. Regarding this matter, a reporter from Thai Nguyen Newspaper interviewed Ms. Nguyen Thi Thuan, Deputy Director of the Provincial Tax Department.

Taxpayers complete procedures at the One-Stop Service Department of the tax office. Photo: T.L

Taxpayers complete procedures at the One-Stop Service Department of the tax authority. Photo: Provided.

PV: Could you please specify the VAT reduction rates stipulated in Decree No. 44?

Ms. Nguyen Thi Thuan: According to Decree No. 44, the Government stipulates the following VAT reduction rates:

Businesses that calculate VAT using the deduction method are subject to an 8% VAT rate on goods and services as prescribed. This excludes the following groups of goods and services: telecommunications, financial activities, banking, securities, insurance, real estate business, metals, etc.; goods and services subject to excise tax; and information technology as defined by the law on information technology.

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 for calculating VAT when issuing invoices for goods and services eligible for VAT reduction.

PV: So, specifically, what are the procedures for reducing VAT according to Decree No. 44, Madam?

Ms. Nguyen Thi Thuan: For businesses calculating VAT using the deduction method, when issuing VAT invoices for goods and services eligible for VAT reduction, the VAT rate line should state "8%"; VAT amount; and the total amount the buyer must pay.

Based on the VAT invoice, businesses selling goods and services declare and deduct output VAT, while businesses purchasing goods and services declare and deduct input VAT according to the reduced tax amount recorded on the invoice.

For businesses that calculate VAT using the percentage-based method on revenue, when issuing sales invoices for goods and services eligible for VAT reduction, the "Total Amount" column should record the full amount of goods and services before the reduction, and the "Total Amount of Goods and Services" line should record the amount after the 20% reduction in revenue; simultaneously, note "the amount corresponding to the 20% reduction in revenue has been reduced according to Resolution No. 101/2023/QH15".

In cases where a business calculates VAT using the deduction method, when selling goods or providing services subject to different tax rates, the VAT invoice must clearly state the tax rate for each item of goods or service as stipulated in Decree No. 44. In cases where a business calculates VAT using the percentage-based method on revenue, when selling goods or providing services, the sales invoice must clearly state the amount of the tax reduction as stipulated in this Decree.

In cases where a business has issued invoices and declared VAT at a tax rate or percentage rate that has not been reduced as stipulated in Decree No. 44, the seller and buyer shall process the issued invoices in accordance with the law on invoices and supporting documents. Based on the processed invoices, the seller shall declare adjustments to output tax, and the buyer shall declare adjustments to input tax (if any). The business shall declare goods and services eligible for VAT reduction using Form No. 01 in Appendix IV issued with the Decree, along with the VAT return.

PV: On behalf of Thai Nguyen province, could you please tell us? How is the Provincial Tax Department implementing Decree No. 44 to taxpayers?

Ms. Nguyen Thi Thuan: To promptly implement the VAT reduction policy, on the same day that Decree No. 44 was issued, the General Department of Taxation issued Official Dispatch No. 05 directing tax agencies to urgently implement it. Following the direction of the General Department of Taxation, the Thai Nguyen Provincial Tax Department proactively implemented and disseminated information to taxpayers in the area. At the same time, it widely publicized the information through mass media so that taxpayers would be aware and comply…

In addition, the Provincial Tax Department has directed its departments and tax branches to proactively implement policies to support taxpayers.

Interviewer: Thank you, ma'am!

With a 2% reduction in VAT, the people are the direct beneficiaries of this policy. Reducing VAT on goods and services currently subject to a 10% VAT rate will contribute to lower selling prices, thereby reducing the cost of goods and services for people's daily lives.

Businesses involved in the production and sale of goods and services subject to VAT at a rate of 10% will benefit from the policy's implementation.

Reducing VAT contributes to lowering production costs and product prices, thereby helping businesses increase their ability to recover and expand production and business.

Regarding the impact of the policy, according to the Government, when applying a 2% reduction in VAT for the last six months of the year, the expected reduction in state budget revenue is approximately 24,000 billion VND (for state budget revenue in 2023, the expected reduction is 20,000 billion VND because the VAT payable for December 2023 will be paid in January 2024).

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