VAT reduction to 8% by the end of 2023

1. All goods subject to 10% VAT are reduced to 8% until the end of 2023. According to the draft proposal, the VAT rate for groups of goods and services subject to a 10% tax rate is proposed to be reduced.

Therefore, according to the draft proposal, all goods subject to 10% VAT will be reduced to 8% until the end of 2023.

Previously, the VAT reduction policy in 2022 according to Decree 15/2022/NĐ-CP applied to groups of goods and services subject to a 10% tax rate, except for the following types of goods that were not eligible for this VAT reduction policy:

• Telecommunications, financial activities, banking, securities, insurance, real estate business, precast metal and metal products, mining products (excluding coal mining), coke, refined petroleum, chemical products. Details are listed in Appendix I issued together with Decree 15/2022/NĐ-CP.

• Goods and services subject to special consumption tax. Details are listed in Appendix II issued together with Decree 15/2022/NĐ-CP.

• Information technology under the law on information technology. Details are listed in Appendix III issued together with Decree 15/2022/NĐ-CP.

• The reduction of value-added tax for each type of goods and services stipulated in paragraph 1 of this Article shall be uniformly applied at import, production, processing, and commercial operations.

For coal products sold after mining (including cases where coal is screened and classified according to a closed process before being sold), they belong to the object of VAT reduction. Coal products listed in Appendix I issued together with Decree 15/2022/NĐ-CP, at stages other than mining and selling, are not eligible for VAT reduction.

For goods and services listed in Appendices I, II, and III issued together with Decree 15/2022/NĐ-CP, if they are not subject to value-added tax or are subject to 5% value-added tax according to the provisions of the Law on Value-Added Tax, they shall be implemented according to the provisions of the Law on Value-Added Tax and shall not be eligible for VAT reduction.

2. VAT reduction rate in 2023 (proposed)

• Businesses will apply a 8% VAT rate for goods and services subject to a 10% tax rate.

The reduction of value-added tax for each type of goods and services subject to a 10% tax rate will be uniformly applied at import, production, processing, and commercial operations.

• Businesses (including individual businesses) will calculate VAT based on the percentage of revenue, and the percentage used to calculate VAT will be reduced by 20% when issuing invoices for goods and services eligible for VAT reduction.