The government has issued Decree No. 180/2024/ND-CP, outlining the extension of value-added tax (VAT) reductions as stipulated in Resolution No. 174, dated November 30, 2024. The policy takes effect from January 1, 2025, and will remain in place until June 30, 2025.

Scope of VAT reduction

The decree specifies a VAT reduction for goods and services currently subject to the 10% VAT rate. However, certain sectors are excluded, including telecommunications, financial services, banking, securities, insurance, real estate, metal products, refined petroleum, chemical products, and mining (excluding coal). A detailed list of exclusions is provided in Appendices I, II, and III of the decree.

Additionally, products and services subject to special consumption tax or governed by IT-specific regulations will not be eligible for the VAT reduction. The policy applies uniformly across importation, production, processing, and commercial distribution stages.

For mined coal sold directly, VAT reductions apply, including cases where coal undergoes screening and classification through a closed-loop process before being sold. However, coal products at stages beyond direct extraction are not eligible for the VAT reduction.

If items listed in the appendices are already subject to a 5% VAT rate or are VAT-exempt, they will remain subject to the existing provisions of the VAT Law and will not qualify for further reductions.

Details of the reduction

Businesses using the deduction-based VAT method will apply a reduced rate of 8% for eligible goods and services. Meanwhile, enterprises and individual businesses calculating VAT using a percentage on revenue will see a 20% reduction in the applicable percentage when issuing invoices for eligible goods and services.

This policy continues the 2% VAT rate reduction for certain goods and services as stipulated in Resolution No. 43/2022/QH15 on fiscal and monetary policies supporting economic recovery.

The National Assembly has directed the government to ensure the policy is executed efficiently while maintaining state revenue and balancing the 2025 budget. This continuation of fiscal support aims to bolster Vietnam's economic recovery and promote sustainable development in the coming years.

Thu Hang