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CHANGES IN APPLICABLE VAT RATE

From 1 July to the end of 2023, a reduction of 2% in the VAT rate will apply to goods and services. It applies to all stages of importation, manufacturing, processing and trading. For services, it depends on the date of completion.

11 Jul 2023

VAT Reduction

LEGAL UPDATE

Because Vietnam’s economy continues to face difficulties and challenges, Decree No. 44/2023/ND-CP (Decree 44) was issued. It sets out some changes in the applicable value-added tax (VAT) rate as per Resolution No. 101/2023/QH15 dated 24 June 2023.

Decree 44 applies from 1 July 2023 to the end of 2023.

1. VAT Rate Reduction

According to Decree 44, the 10% VAT rate that applies to goods and services will be reduced by 2% to 8%. This reduction does not apply to the following goods and services:

  • Group 1: Telecommunications, financial activities, banking, securities, insurance, real estate business, metals, and prefabricated products, mining products (excluding coal mining), coke coal, refined petroleum, and chemical products (see Appendix I for details);

  • Group 2: Goods and services subject to special consumption tax (see Appendix II for details); and

  • Group 3: Information technology under the information technology laws (see Appendix III for details).

The reduction applies to all stages of importation, manufacturing, processing, and trading.

2. Exceptions

However, note that the reduction will apply as follows:

  • From 1 January 2023 to the end of June 2023, the rate of 10% will apply for goods delivered and services completed.

  • From 1 July 2023 to the end of 2023, the tax rate of 8% will apply. This can result in applying two tax rates in one invoice depending on the completion of the service or delivery of the goods.

For more information, please contact:

Mark Oakley / Managing Partner

mark.oakley@acsvlegal.com

© 2023 ACS Legal Vietnam Company Limited – All rights reserved

This legal update is not an advice and should not be treated as such.

ACSV Legal is one of the top international law firms in Vietnam. Our specialist team of foreign and Vietnamese lawyers advise on sectors and industries from banking and finance to corporate restructuring and from real estate to tax. We help clients to invest and set up companies in Vietnam and better understand the business opportunities of this fast-growing market.

Our firm is a prominent fixture in the Legal 500 and other professional rankings thanks to our in-depth knowledge of Vietnam’s legal system and major legislation affecting foreign companies such as the Law on Investment, Labour Code, and Law on Enterprise.

For more information on doing business in Vietnam - whether through incorporation, investment, or M&A - just contact our team.