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.
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.
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.
Mark Oakley / Managing Partner
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This legal update is not an advice and should not be treated as such.
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