Accounting and taxes need to know

Summary of important policies on reducing VAT to 8% from July 1, 2023 to December 31, 2023 according to Decree 44/2023/ND-CP.

Giảm thuế GTGT xuống còn 8% từ ngày 1/7/2023: Kế toán, thuế cần biết

VAT officially reduced to 8% from July 1, 2023. (Source: TVPL)

Types of goods and services that are and are not subject to VAT reduction to 8% from July 1, 2023

Business establishments calculating VAT according to the deduction method are subject to a VAT rate of 8% for the following goods and services:

(1) 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 44/2023/ND-CP.

Download: FULL TEXT OF APPENDIX I

(2) Goods and services subject to special consumption tax. Details in Appendix II issued with Decree 44/2023/ND-CP.

Download: FULL TEXT APPENDIX II

(3) Information technology according to the law on information technology. Details in Appendix III issued with Decree 44/2023/ND-CP.

Download: FULL TEXT OF APPENDIX III

The VAT reduction 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), VAT reduction is applicable. Coal products listed in Appendix I issued with Decree 44/2023/ND-CP, at stages other than mining and selling, VAT reduction is not applicable.

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

In case the goods and services listed in Appendices I, II and III issued with Decree 44/2023/ND-CP are not subject to VAT or are subject to 5% VAT according to the provisions of the Law on Value Added Tax, the provisions of the Law on Value Added Tax shall apply and VAT shall not be reduced.

VAT reduction for households and individuals doing business and calculating VAT as a percentage of revenue according to Decree 44/2023

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

Instructions for making 8% VAT invoices according to Decree 44/2023

(1) For business establishments calculating VAT using the deduction method:

When making a VAT invoice for providing goods and services subject to VAT reduction, write "8%" in the VAT rate line; VAT amount; total amount the buyer must pay.

Based on VAT invoices, businesses selling goods and services declare output VAT, businesses purchasing goods and services declare input VAT deductions based on the reduced tax amount recorded on VAT invoices.

(2) For business establishments (including business households and individual businesses) calculating VAT according to the percentage method on revenue:

When making a sales invoice for providing goods and services subject to VAT reduction, in the "Total amount" column, fully record the amount of goods and services before the 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 VAT according to Resolution No. 101/2023/QH15".

Note:

- In case a business establishment calculates VAT using the deduction method when selling goods and providing services applying different tax rates, the VAT invoice must clearly state the tax rate of each good and service according to the provisions of Clause 3, Article 1 of Decree 44/2023/ND-CP.

- In case business establishments (including business households and individual businesses) calculate VAT according to the percentage method on revenue when selling goods and providing services, the sales invoice must clearly state the amount of reduction according to the provisions of Clause 3, Article 1 of Decree 44/2023/ND-CP.

In case the business establishment has issued an invoice and declared according to the tax rate or percentage to calculate VAT that has not been reduced according to the provisions of Decree 44/2023/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 VAT reduction according to Form No. 01 in Appendix IV issued with Decree 44/2023/ND-CP together with the VAT Declaration.

Form for declaring goods with 2% VAT reduction according to Decree 44/2023

Declaration form for goods and services eligible for VAT reduction (Form No. 01) according to Decree 44/2023/ND-CP dated June 30, 2023 of the Government.

Accordingly, business establishments shall declare goods and services eligible for VAT reduction according to the Declaration Form for goods and services eligible for VAT reduction (Form No. 01) in Appendix IV issued with Decree 44/2023/ND-CP together with the VAT Declaration Form.

Below is the Declaration Form for goods and services eligible for 2% VAT reduction:

Download: Form for declaring goods with 2% VAT reduction

Instructions for declaring 8% VAT rate on VNACCS/VCIS system

On June 30, 2023, the General Department of Customs issued Official Dispatch 3431/TCHQ-TXNK on the implementation of Decree 44/2023/ND-CP on VAT reduction according to Resolution 101/2023/QH15.

Accordingly, the General Department of Customs guides the declaration of 8% VAT rate on the VNACCS/VCIS system as follows:

Request provincial and municipal Customs Departments to guide customs declarants:

- Select the correct code VB205 to declare the 8% VAT rate.

Code VB205 does not apply to the following cases: subjects not subject to VAT, subjects subject to VAT subject to VAT rates of 0%, 5% and 10% (according to regulations in the Law on Value Added Tax).

- The reduction of VAT rate from 10% to 8%, declaration code VB205 only applies to customs declarations registered from 0:00 on July 1, 2023 (corresponding to the information indicator Registration date on the customs declaration).

In case the customs declaration is registered before 0:00 on July 1, 2023 (with the Registration Date information on the customs declaration less than 0:00 on July 1, 2023), the VAT rate of 8% will not be applied (declaration code VB205).

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