On June 30, 2024, the Government issued Decree 72/2024/ND-CP, which outlines a policy to reduce the value-added tax (VAT) rate from July 1, 2024 to December 31, 2024.

Goods and services eligible for VAT reduction

The reduced VAT rate applies to goods and services currently subject to the standard 10% VAT rate, excluding certain categories. The VAT reduction will be applied uniformly at all stages - import, production, processing, and commercial business.

Goods and services that are exempt from VAT or subject to the 5% VAT rate will not be eligible for the reduced rate.

Excluded categories

• Telecommunications, financial activities, banking, securities, insurance, real estate business, metals and products from pre-cast metals, mining products (excluding coal mining), coke, refined petroleum, chemical products. Details are provided in Appendix I of the Decree.
• Goods and services subject to special consumption tax. Details are provided in Appendix II of the Decree.
• Information technology as per the law on information technology. Details are provided in Appendix III of the Decree.

VAT reduction rates

• Taxpayers declaring VAT under the credit method will be eligible for an 8% VAT rate on goods and services qualifying for the reduction.
• Taxpayers declaring VAT under the deemed method (percentage of revenue) will receive a 20% reduction on the applicable VAT amount when invoicing for eligible goods and services.

Procedures for eligibility and application:

• The reduced VAT rate/amount must be reflected on invoices.
• For goods or services with different tax rates, the VAT invoice must clearly indicate the rate for each item/service.

Taxpayers must declare eligible goods and services using Form 01 in Appendix IV of the Decree, along with the standard VAT declaration form.