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.
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 in Vietnam with international standards, recognized
by Legal500, IFLR1000. We are an exclusive Vietnam member of Prea Legal, the
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