The Vietnamese government has announced a new decree that aims to support businesses and individuals through tax reduction. This policy will see a preferential value-added tax (VAT) rate of 8% for goods and services until the end of the year, which is a 2% reduction from previous rates. However, certain products are excluded from this tax incentive, 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 not eligible for tax reduction.
The Vietnam Federation of Commerce and Industry (VCCI) had previously proposed a 2% reduction in VAT for all goods and services but faced challenges in classification implementation. The reduction applies uniformly across all stages of import, production, processing and commercial business. Businesses that calculate VAT using the deduction method must clearly state the tax rate of each type on the VAT invoice. On the other hand, business establishments that calculate tax based on the percentage method on revenue will receive a 20% reduction when issuing invoices.
This policy aims to benefit both businesses and consumers as it reduces the burden of VAT sharing between them. Extending the 2% tax reduction period for another six months is expected to decrease budget revenue in the second half of the year. In summary, while this policy aims to support businesses and individuals during economic challenges, certain sectors are excluded from tax incentives.
