Decree 44/2023/ND-CP: Vietnam VAT Reduction to 8% in 2023

Overall, Decree 44 has main content similar to the provision on VAT reduction in 2022 stipulated in Decree 15/2022/ND-CP dated 28 January 2022.

The notable points of this Decree are: (1) subjects of application, (2) the reduction rate and (3) the procedure for declaring VAT reduction.

1. Subjects of applications

Groups of goods and services specified for VAT exemption and reduction are similar to Decree 15/2022/ND-CP on VAT reduction in 2022.

• In scope: Groups of goods and services currently subject to the tax rate of 10%.
• Excluded: Groups of goods and services specified in Appendix I, II and III promulgated with Decree 44, such as:
  • Telecommunications
  • Information Technology
  • Financial activities
  • Banking
  • Securities
  • Insurance
  • Real estate business
  • Metal
  • Goods and services subject to special sales tax, etc.

2. Reduction rate

• Business establishments declaring VAT under the credit method: VAT rate of 10% shall be reduced by 2% (to 8% VAT rate).
• Business establishments declaring VAT under the direct method: VAT rate shall be reduced by 20% of the deemed rate on VATable revenue.

3. Procedure for declaring VAT reduction

Business establishments declare goods and services entitled to VAT reduction according to Form No. 01 enclosed in Appendix IV of Decree 44, together with the VAT declaration.

To implement the reduction and mitigate administrative burden on adjusted invoices, revenue and output VAT, business establishments/enterprises are recommended to:

1. Identify goods and services that are entitled to VAT rate reductions as prescribed in Decree 44 on a timely basis.
2. Liaise with accounting software service providers to update/adjust VAT rates on the system accordingly.

4. Conclusion

The information and analysis herein are of a generic nature and are quoted or interpreted from the regulations. We recommend that clients contact Forvis Mazars Vietnam’s advisors for further clarification and professional advice for each particular circumstance.

How can we help?

Contact our Tax Advisory team to discuss how Decree 44/2023/ND-CP applies to your goods, services and VAT declarations in Vietnam.