GUIDANCE ON REDUCING VAT TO 8% ACCORDING TO DECREE 15/2022/ND-CP

Accordingly, the value-added tax rate will be reduced by 2% in 2022, applicable to groups of goods and services currently applying the value-added tax rate of 10% (to 8%).

1. The objects entitled to value-added tax reduction to 8%

• Article 1 of Decree 15/2022/ND-CP stipulating value-added tax reduction for groups of goods and services currently applying the tax rate of 10%, except for the following groups of goods and services:

✨ Telecommunications, financial activities, banking, securities, insurance, real estate trading, metals, and prefabricated metal products, mining products (excluding coal mining), coke, refined petroleum, chemical products. Details are in Appendix I

✨  Products and services are subject to excise tax. Details are in Appendix II issued with this Decree.

✨  Information technology is in accordance with the law on information technology. Details are in Appendix III issued together with this Decree.

2. Application of the object of guidance on value-added tax reduction of 8%

⭕ The reduction of VAT for each good and service is uniformly applied on import, production, processing, business, and trade. For the sold coal products (including the case of coal mining, then through screening, classified according to a closed process to be sold ) that are subject to value-added tax reduction. Coal products listed in Appendix I issued together with this Decree cannot be reduced to value-added tax at other stores.

⭕ In case the goods and services mentioned in Appendices I, II and III issued together with this Decree are not subject to value-added tax or subject to a value-added tax of 5% according to the provisions of the Law on Value Added Tax then comply with the provisions of the Law on Value Added and cannot reduce value-added tax.

3. Value-added tax reduction rate

⭐ Business establishments that calculate VAT by the deduction method may apply the VAT rate of 8% for goods and services eligible for tax reduction.

⭐ Business establishments (including business households and business individuals) that calculate VAT according to the percentage method on turnover are entitled to a reduction of 20% of the percentage rate to calculate VAT when issue invoices for goods and services are entitled to a reduction in VAT specified in Clause 1 of this Article

4. Process and procedures for value-added tax reduction

🍀 Business establishments that calculate VAT by the deduction method: when making VAT, providing goods and services subject to VAT reduction, at the VAT rate line write “8%”; value-added tax amount; the total amount to be paid by the buyer. Based on value-added invoices, business establishments selling goods and services shall declare output value-added tax, and business establishments purchasing goods and services shall declare and deduct input value-added tax according to the reduced tax amount written on the value-added invoice.

🍀 Business establishments (including business households and business individuals) calculate VAT according to the percentage method on revenue: when making sales invoices for the provision of goods and services subject to value-added tax reduction, in the column "Total money" write the full amount of goods and services before the reduction, in the line "Add money for goods and services" recorded by the number that has reduced 20% of the percentage of revenue, and at the same time note: "reduced... (amount) equivalent to 20% of the percentage rate for calculating VATaccording to Resolution No. 43/2022/QH15".

🍀 Business establishments must make separate invoices for goods and services eligible for VAT reduction. In case a business establishment does not issue a separate invoice for goods and services eligible for value-added tax reduction, it is not entitled to a reduction of value-added tax.

🍀 In case the business establishment has issued an invoice and declared at the tax rate or percentage to calculate the VAT that has not been reduced as prescribed in this Decree, the seller, and the buyer must make a record or there is a written agreement specifying the error, at the same time the seller makes an invoice to correct the error and delivers the adjusted invoice to the buyer. Based on the adjusted invoice, the seller declares and adjusts the output tax, and the buyer declares the adjustment of input tax (if any).

🍀 In case a goods or service business establishment eligible for VAT reduction has issued an ordered invoice printed in the form of a pre-printed ticket with its unused face value (if any) and has the need to continue using it, the business establishment shall stamp the price according to the price that has been reduced by 2% of the value-added tax rate or the price that has been reduced by 20% next to the pre-printed price criterion to continue using.

🍀 Business establishments specified in this Article shall declare value-added tax-reduced goods and services according to Form No. 01 in Appendix IV issued together with this Decree and the value-added tax declaration.

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