In order to stimulate
growth and recover the economy after the impact of the Covid-19 pandemic, the
Government has issued a policy to reduce value added tax. The reduction of
value-added tax is an effective solution and tool to stimulate consumption and
is expected to create a driving force for rapid development to help businesses
restore business and production.
International Trade and Tax in Vietnam
The value-added tax reduction policy has been promulgated by Decree 15/2022/ND-CP stipulating the
tax exemption and reduction policy according to the National Assembly’s
Resolution No. 43/2022/QH15 on fiscal and monetary policies currency to support
the program of socio-economic recovery and development. Accordingly, value
added tax will be reduced from 10% to 8%. This reduction will create conditions
for consumers to increase spending, through which businesses will sell more
products.
The value-added tax
reduction will be applied to groups of goods and services currently subject to
the 10% tax rate, except for the following groups of goods and services: (i)
Telecommunications, financial and banking activities commodities, securities,
insurance, real estate trading, metals and prefabricated metal products, mining
products (excluding coal mining), coke, refined petroleum, chemical products;
(ii) Products, goods and services subject to excise tax; (iii) Information
technology under the law on information technology. However, if the goods and
services are not subject to value-added tax or subject to value-added tax of 5%
according to the provisions of the Law on Value-Added Tax, the provisions of
the Law on Value-Added Tax shall be applied and not entitled to value added tax
reduction.
It is important to note
the value-added tax calculation method to apply. Accordingly, if the enterprise
calculates value-added tax by the deduction method, the value-added tax rate of
8% shall apply; and in case the enterprise calculates value-added tax according
to the percentage method on sales, collected, it will be reduced by 20% of the
percentage rate for calculating value-added tax when issuing invoices for goods
and services eligible for value-added tax reduction as prescribed.
The value-added tax
reduction will be implemented quickly and businesses and consumers will
immediately benefit. This tax reduction is expected to help reduce the cost of
products and services, thereby stimulating consumer demand. Besides, it will
help increase production output of enterprises and create more jobs for
workers. Therefore, the reduction of value added tax is considered necessary
solutions to promote the economy to recover soon after a long time affected by
the pandemic.
The value-added tax
reduction policy will be effective from February 1st, 2022 to the
end of December 31st, 2022. Previously, value-added tax was only
reduced for a few specific products, but with this policy, the object of tax
reduction has been expanded in most fields of business and production.
Therefore, the impact of this policy on the economy in the future is very
large. However, in order for the value-added tax reduction to reach consumers,
tax authorities need stricter inspection and control to meet the set goals.
When in doubt, it is important to consult with tax lawyers in Vietnam for solutions and advice.
ANT Lawyers is a Law firm
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