The Government has officially issued Decree 72/2024/NĐ-CP on 30 June 2024, which stipulates a 2% reduction in Value Added Tax (“VAT”). This new decree is aimed at stimulating economic growth and supporting businesses.
Key Points of Decree 72/2024/NĐ-CP:
- Reduction in VAT: The VAT rate will be reduced by 2%, for goods and services currently subject to a 10% tax rate, excluding sectors such as:
- Telecommunications, financial activities, banking, securities, insurance, real estate business, metals and fabricated metal products, mining products (excluding coal mining), coke, oil refined mines, chemical products;
- Goods and services subject to special consumption tax;
- Information technology according to the law on information technology.
- VAT reduction based on the applicable declaration method:
- Business establishments that calculate VAT using the deduction method may apply the 8% VAT rate for goods and services eligible for VAT reduction.
- Business establishments (including business households and individual businesses) that calculate VAT using the percentage-on-revenue method are entitled to a 20% reduction in the percentage rate to calculate VAT when issuing invoices for goods and services eligible for value added tax reduction.
- Effective Date: The decree will be in effect from 01st July 2024 until 31st December 2024.