What items are not eligible for a 2% VAT reduction from July 1 to the end of 2023?

According to the Resolution of the 5th Session recently passed by the National Assembly on the afternoon of June 24, the value-added tax (VAT) will be reduced by 2% from July 1, 2023 to December 31, 2023.

 

With a 2% reduction in VAT, people are the direct beneficiaries of this policy. That contributes directly to the reduction of people's costs in consuming goods and services to serve people's lives.

 

Enterprises that produce, trade in goods and provide services subject to VAT at the rate of 10% will benefit when the policy is issued. The reduction of VAT will contribute to reducing production costs, lowering product costs, thereby helping businesses increase resilience and expand production and business.

 

According to the Government's report, groups of goods and services currently applying the 10% tax rate will receive value-added tax reduction, except for the following groups of goods and services:

 

- Telecommunications, financial activities, banking, securities, insurance, real estate trading, metals and prefabricated metal products, mining products (excluding coal mining), coke, refined petroleum, chemical products. Details are in Appendix I issued together with this Decree.

 

- Products and services subject to excise tax. Details are in Appendix II issued together with this Decree.

 

- Information technology in accordance with the law on information technology. Details are in Appendix III issued with this Decree.

 

- The reduction of value-added tax for each type of goods and services specified in Clause 1 of this Article shall be applied uniformly at the stages of import, production, processing, business and trade. For the sold coal products (including the case of coal mined and then screened, classified according to a closed process, then sold) subject to value-added tax reduction. Coal products listed in Appendix I to this Decree are not eligible for value-added tax reduction at other stages other than the mining stage.

 

In case the goods and services mentioned in Appendices I, II and III issued together with this Decree are not subject to value-added tax or subject to 5% value-added tax under the provisions of this Law. Value-added tax shall comply with the provisions of the Law on Value-Added Tax and may not reduce value-added tax.

 

Regarding the reduction, business establishments that calculate value-added tax by the credit method may apply the VAT rate of 8% for specified goods and services.

 

Business establishments (including business households and business individuals) that calculate value-added tax by the method of percentage on turnover are entitled to a reduction of 20% of the percentage rate to calculate value-added tax when implementing issue invoices for goods and services eligible for value-added tax reduction.

 

According to the Government's report, on the impact of the policy, if a 2% VAT reduction is applied in the last 6 months of the year, the reduction in State budget revenue is expected to be equivalent to about VND 24,000 billion (for state budget revenues). The State in 2023 is expected to reduce by VND 20,000 billion due to the VAT payable in December 2023 to be paid in January 2024).

 

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Trong Tran

 

Economic life