Decree No. 174/2025/ND-CP shall be effective from July 1, 2025, and will remain in effect until December 31, 2026.
The decree specifies a reduction in VAT for certain groups of goods and services currently subject to a 10 percent tax rate, excluding the following categories: telecommunications, financial activities, banking, securities, insurance, real estate transactions, metal products, mining products (excluding coal) and goods and services subject to special consumption tax (excluding gasoline).
Additionally, the decree clarifies that the VAT reduction for each type of goods and services will be uniformly applied across all stages of importation, production, processing, and commercial trading.
For goods and services exempt from VAT or subject to a 5 percent VAT rate as per the VAT Law, the VAT Law provisions shall apply, and no VAT reduction will be provided.
Regarding the VAT reduction rate, the decree specifies that businesses using the deduction method for VAT calculation shall apply an 8 percent VAT rate to the designated goods and services. Businesses, including business households and individual entrepreneurs, calculating VAT based on a percentage of revenue shall receive a 20 percent reduction in the percentage rate used for VAT calculation when issuing invoices for goods and services eligible for VAT reduction.
The decree also outlines the procedures and steps for implementing the VAT reduction.
