The Vietnamese government has recently issued a decree regulating its policy of reducing value-added tax (VAT) according to a previous resolution of the National Assembly. This reduction in VAT will continue until the end of this year, maintaining the preferential rate of 8% (a decrease of 2%) to support businesses and individuals amidst economic challenges caused by unpredictable global developments.
However, some products are not eligible for tax incentives, including telecommunications, finance and banking, securities, insurance, real estate, metals, fabricated metal products, mining products (excluding coal mining), coke, refined petroleum, and chemicals. Additionally, goods and services subject to special consumption tax and information technology are also not eligible for tax reduction.
The Vietnam Federation of Commerce and Industry (VCCI) previously proposed a 2% reduction in VAT for all goods and services across all stages of import, production, processing, and commercial business. However, implementation faced challenges in classification. Businesses that calculate VAT using the deduction method must clearly state the tax rate on their VAT invoice.
Business establishments that calculate tax based on the percentage method on revenue will receive a 20% reduction when issuing invoices. The reduction in VAT is expected to benefit both businesses and consumers by sharing the tax burden between them. Extending the 2% tax reduction period for another 6 months is predicted to decrease budget revenue in the second half of the year.
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