Groups of goods subject to a 2% VAT reduction from 1/7/2023

To assist businesses and entrepreneurial entities in addressing challenges and uncertainties related to the qualification of their goods and services for the value-added tax reduction from 10% to 8%, as stipulated in Resolution No. 101/2023/QH15 and Government Decree No. 44/2023/ND-CP, Faro Vietnam has compiled a concise overview of goods that qualify for the 2023 VAT reduction. We cordially invite you to peruse the following article for more insights.

1. Officially reduce 2% VAT from 1/7/2023

On the afternoon of June 24, 2023, at the 5th session, the 15th National Assembly officially approved the Resolution of the 5th session, the 15th National Assembly with 481/482 delegates voting in favor.

According to the Resolution of the 5th session, the XV National Assembly and the National Assembly approved a reduction of 2% of value-added tax for groups of goods and services that are applying the value-added tax rate of 10% to 8% according to Decree No. Decision 43/2022/QH15 dated 11/01/2022. Specifically:

1.1 According to Article 3 of Resolution 43/2022/QH15, the reduction of VAT is implemented as follows

Reduction of 2% value-added tax rate in 2022, applicable to groups of goods and services currently applying the value-added tax rate of 10% (remaining 8%), except for some groups of goods , the following services: telecommunications, information technology, financial activities, banking, securities, insurance, real estate trading, metals, prefabricated metal products, mining products (not including coal mining), coke, refined petroleum, chemical products, goods and services subject to excise tax;

Thus, from July 1, 2023 to the end of December 31, 2023, officially reducing VAT to 8% for groups of goods and services that are subject to 10% VAT, except for some groups of goods. following services:

• Group of goods and services of telecommunications, information technology,
• Group of goods, services, financial activities, banking, securities,
• Group of goods, insurance services,
• Group of goods and services for real estate business,
• Group of metal goods and services, prefabricated metal products, mining products (excluding coal mining), coke, refined petroleum, chemical products, commodity products
• Group of services subject to excise tax;

In addition, at the 5th National Assembly session, the Standing Committee of the National Assembly stated that it is currently not possible to increase the reduction or expand the scope of VAT reduction because it will affect and affect the state budget revenue, the Government has not counted. complete accounting and assessment of policy impacts

At the same time, the Government is requested to report to the National Assembly at the 6th Session the results of the implementation of the policy of reducing value-added tax by 2% along with the results of the implementation of Resolution 43 for the National Assembly to consider and decide to supplement. solutions to support economic recovery and development, if any.
 

VAT reduction from 1/7/2023: What items are eligible for tax reduction?

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1.2 Which group of goods and services will receive VAT reduction under Resolution 43 and Decree 15/2022/ND-CP?

In 2022, the National Assembly promulgates Resolution 43/2022/QH15 on fiscal and monetary policies to support the socio-economic recovery and development program promulgated by the National Assembly, including the Program support policy. socio-economic recovery and development, specifically the VAT reduction policy as follows:

– Reduction of 2% value-added tax rate in 2022, applicable to groups of goods and services currently applying the value-added tax rate of 10% (remaining 8%), except for some groups of goods goods and services: telecommunications, information technology, financial activities, banking, securities, insurance, real estate trading, metals, prefabricated metal products, mining products ( excluding coal mining), coke, refined petroleum, chemical products, goods and services subject to excise tax.

Then, on January 28, 2022, the Government issued Decree 15/2022/ND-CP guiding specifically those who are eligible for VAT reduction and non-reduction according to Resolution 43/2022/QH15. Accordingly, except for the following subjects, the groups of goods and services subject to VAT will be reduced to 8%:

• Telecommunications, financial activities, banking, securities, insurance, real estate trading, metals and prefabricated products, mining products (excluding coal mining), coke, oil Refined mines, chemical products. Details are in Appendix I issued together with this Decree.
• Goods and services subject to excise tax. Details are in Appendix II issued together with Decree 15/2022/ND-CP.
• Information technology under the law on information technology. Details are in Appendix III issued with this Decree.
• The value-added tax reduction for each type of goods and services specified in Clause 1, Article 1 of Decree 15/2022/ND-CP is uniformly applied at the stages of import, production, processing and business. commerce. For the sold coal mined (including the case of coal mined and then filtered, classified according to a closed process to be sold) which is subject to value added tax reduction. Coal products listed in Appendix I issued together with Decree 15/2022/ND-CP are not eligible for value-added tax reduction at stages other than mining and selling.

In case goods and services mentioned in Appendices I, II and III issued together with Decree 15/2022/ND-CP are not subject to value-added tax or subject to value-added tax % in accordance with the Law on Value-Added Tax shall comply with the Law on Value-Added Tax and shall not be entitled to a reduction in value-added tax.
 

Items eligible for VAT reduction from 1/7/2023

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2. Impact of 2% VAT reduction from 1/7/2023

Regarding the impact of this policy, according to the Government's report, if the reduction of 2% of value-added tax is applied in the last 6 months of the year, it is expected that the reduction in State budget revenue will be about VND 24,000 billion (for with state budget revenue in 2023, it is expected to decrease by VND 20,000 billion because value-added tax revenue of December 2023 is paid in January 2024).

The 2% reduction of value-added tax will directly benefit people, reducing the selling price of goods and services subject to the 10% tax rate, thereby reducing people's consumption costs.

For enterprises producing and trading goods and providing services subject to value added tax at the rate of 10%, they will benefit from this policy. The reduction of value-added tax will help reduce production costs, reduce product costs, thereby supporting enterprises in recovering and expanding production and business.

If you still have question regarding regulations of VAT reduction from 1/7/2023, feel free
to reach out to us using the contact information provided below:

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