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TAX ALERT 01 July, 2024

DECREE NO. 72/2024/ND-CP ON VALUE ADDED TAX REDUCTION POLICY ACCORDING TO RESOLUTION NO. 142/2024/QH15 OF THE NATIONAL ASSEMBLY

To maintain the objective of supporting taxpayers during difficult times, on 30 June 2024, the Government issued Decree No. 72/2024/ND-CP on the policy of reducing value-added tax (VAT) for the period from 01 July 2024, to 31 December 2024.

This VAT reduction policy does not differ from the VAT reduction policy for the period from 01 January 2024 to 30 June 2024.

The main contents of the Decree are as follows:

I. Subjects Eligible for Tax Reduction

VAT reduction for goods and services currently subject to a 10% tax rate, except for the following groups:

- VAT reduction for goods and services currently subject to a 10% tax rate, except for the following groups:

a. Telecommunications, financial activities, banking, securities, insurance, real estate, metals, and products made from fabricated metals, mineral products (excluding coal mining), coke, refined petroleum, and chemical products (detailed in Appendix I).

b. Goods and services subject to special consumption tax (detailed in Appendix II).

c. Information technology as per IT laws (detailed in Appendix III).

- VAT reduction is uniformly applied at all stages of import, production, processing, and commercial trading. Coal products are eligible for VAT reduction only at the mining stage.

- Goods and services in Appendices I, II, and III that are exempt from VAT or subject to 5% VAT according to the VAT Law will not receive additional reductions.


II. Tax Reduction Rates

- Businesses calculating VAT by the deduction method are subject to an 8% VAT rate for goods and services eligible for tax reduction.

- Businesses (including household businesses and individual businesses) calculating VAT by the percentage method on revenue receive a 20% reduction in the percentage rate used to calculate VAT when issuing invoices for eligible goods and services.


III. Implementation Procedures

- For businesses calculating VAT by the deduction method, when issuing VAT invoices for goods and services eligible for tax reduction, the tax rate line should state “8%”; VAT amount; and the total amount payable by the buyer. Businesses declare output and input VAT according to the reduced tax amount indicated on the invoice.

- For businesses calculating VAT by the percentage method, when issuing sales invoices for goods and services eligible for tax reduction, the "Total amount" column should fully state the amount before reduction, and the “Total amount” line should state the amount reduced by 20% of the percentage rate, with a note: “reduced by... (amount) corresponding to 20% of the percentage rate to calculate VAT according to Resolution No. 142/2024/QH15.”


This Decree is effective from 1 July 2024, to 31 December 2024


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