Items not eligible for 2% VAT reduction from July 1

Telecommunications, securities, insurance and real estate business services are not eligible for a 2% reduction in value added tax.

The General Department of Taxation has just issued a telegram directing the tax sector to urgently implement Decree No. 44 regulating the policy of reducing value-added tax (VAT).

On June 30, the Government issued Decree 44 regulating the VAT reduction policy according to the Resolution of the National Assembly . Accordingly, the VAT reduction applies from July 1 to the end of this year to groups of goods and services currently subject to a VAT rate of 10%, except for some groups of goods and services.

Firstly, the group of telecommunications enterprises, financial activities, banking, securities, insurance, real estate business are not eligible for VAT reduction. The metal and prefabricated metal products industry, mining products (excluding coal mining), coke, refined petroleum, and chemical products are also excluded.

Second, the group of goods and services subject to special consumption tax, also does not enjoy preferential VAT policies, such as: Cars with less than 24 seats; gasoline of all kinds; alcohol, beer, cigarettes; air conditioners, motorbikes; lottery business, golf...

The third group excluded is information technology enterprises. In addition, there are a number of other exclusions that apply to coal mining enterprises.

The Decree also clearly states that business establishments calculating value added tax by the deduction method are subject to a value added tax rate of 8%. Business establishments calculating VAT by the percentage method on revenue are also entitled to a 20 percent reduction on the VAT calculation rate.

The Ministry of Finance estimates that this policy will reduce state budget revenue by about VND24,000 billion, including a reduction of VND20,000 billion in 2023 and VND4,000 billion in 2024.

Quynh Trang

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