The Government has officially issued Decree No. 180/2024/ND-CP, implementing the value-added tax (VAT) reduction as mandated by National Assembly Resolution No. 174/2024/QH15. This decree will come into effect on January 1, 2025 and remain in force until June 30, 2025.
The Decree explicitly indicates that the VAT will be lowered for categories of goods and services that are presently taxed at a rate of 10 percent. However, this reduction does not apply to the following categories such as telecommunications, financial services, banking, securities, insurance, real estate transactions, metals and prefabricated metal products, mining products (with the exception of coal mining), coke, refined petroleum, chemical products, goods and services that are subject to special consumption tax, and information technology as defined by the relevant legislation.
The VAT decrease for all goods and services is applied consistently throughout the import, production, processing, and commercial business stages, as the Decree further makes clear.
Coal products that are sold, which include those that have been mined and subsequently screened and classified through a closed process prior to sale, qualify for a VAT reduction. However, coal products, as detailed in Appendix I of this Decree, are not eligible for VAT reduction at any stages other than the mining and selling phases.
For coal products sold, corporations and economic organizations who use a closed procedure prior to sale are also eligible for a VAT reduction.
The rules of the Law on VAT will be applicable and VAT reduction will not be permitted in situations where products and services are either exempt from VAT or subject to 5 percent VAT under the Law on VAT.
Regarding the VAT reduction rate, the Decree makes it quite clear that businesses who use the deduction technique to calculate VAT are allowed to use the 8 percent VAT rate for the aforementioned goods and services.
Business establishments including households businesses and individual businesses calculating VAT by the percentage method on revenue are entitled to a 20 percent reduction in the percentage rate for calculating VAT when issuing invoices for goods and services eligible for VAT reduction specified above.
