VAT reduction policy 2024: 4 things businesses need to master

The VAT reduction policy in 2024 is one of the notable contents in a series of new regulations effective from January 1, 2024. Based on the assessment of the results achieved by the VAT reduction solution in 2023 according to Resolution No. 101/2023/QH15, in 2024, the tax reduction policy will continue to be implemented to support businesses and people. To apply tax reduction properly according to Decree 94/2023/ND-CP, taxpayers need to pay attention to the 4 important issues below.

1. When does the 2024 VAT reduction policy apply?

Pursuant to Article 2, Decree 94/2023/ND-CP stipulating the effectiveness and organization of implementation, this Decree takes effect from January 1, 2024 to June 30, 2024. . The organization and implementation of the authorities is carried out during this period.

Thus, the VAT reduction period in 2024 according to Decree 94/2023/ND-CP will last from January 1, 2024 to June 30, 2024. After June 30, 2024, VAT rates will return to the tax rates prescribed in the 2008 Value Added Tax Law if there is no other executive document.

2. Detailed content of the 2024 tax reduction policy

Basically, the content of Decree 94/2023/ND-CP regulating the issue of 2% VAT reduction is based on the inheritance of the contents specified in Decree 44/2023/ND-CP that was issued before.

New tax policies applicable from January 01, 2024

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2.1. Subjects of VAT reduction According to Decree 94/2023/ND-CP

Decree 94/2023/ND-CP implements tax reduction policy according to Resolution 110/2023/QH15. Accordingly, according to Article 1 of this Decree, goods and services that continue to enjoy tax reduction include:

Groups of goods and services currently subject to a tax rate of 10% are entitled to a 2% VAT reduction, except for the following groups of goods and services:

  • Telecommunications, banking and finance, securities, insurance, real estate business, metals and fabricated metal products, mining products (excluding coal mining), coke, refined petroleum, chemical products. Details of the items are specified in Appendix I, issued together with this Decree.
  • Goods and services subject to special consumption tax are specified in detail in Appendix II, issued together with the Decree.
  • Information technology according to the law on information technology. Details are specified in Appendix III issued with the Decree.
  • The VAT reduction for each group of goods and services mentioned above is applied uniformly at all stages of import, production, processing, and commercial business. Particularly for coal products that are mined for sale (including coal that is mined and then screened and classified according to a closed process before being sold) are subject to VAT reduction. Coal products listed in Appendix I issued with this Decree, sold at stages other than the exploitation stage, are not subject to VAT reduction.

Note: In case the goods and services listed in Appendices I, II, III issued with this Decree are subject to VAT or subject to 5% value added tax according to the provisions of the Law Value added tax and no VAT reduction.

2.2. VAT reduction

Pursuant to Clause 2, Article 1, Decree 94/2023/ND-CP, the VAT rate reduction is 2% for business establishments that calculate tax using the deduction method.

For business establishments that calculate tax using the revenue ratio method, the VAT rate will be reduced by 20% when issuing invoices for goods and services eligible for VAT reduction.

3. How to issue VAT reduction invoices according to Decree 94/2023/ND-CP

Issuing invoices to reduce VAT to 8% according to Decree 94/2023/ND-CP is done as follows:
– Business establishments specified in Point a, Clause 2, Article 1, Decree 94/2023/ND-CP:

  • In the VAT rate line on the invoice, write “8%”; VAT and total amount the buyer must pay.
  • Business establishments declare output VAT, business establishments purchasing goods and services declare and deduct input VAT based on VAT invoices.
  • If the tax rates are different, the VAT invoice must clearly state the tax rate of each good and service as prescribed in Clause 3, Article 1, Decree 94/2023/ND-CP.

VAT scheme for Small Businesses

– Business establishments specified in Point b, Clause 2, Article 1, Decree 94/2023/ND-CP:

  • In the “Amount” column, write the full amount of goods and services before tax reduction.
  • In the line “Add money for goods and services”: Record the number that has reduced the percentage of revenue by 20% and note “reduced”… corresponding to 20% of the percentage to calculate VAT according to Decree Decision 94/2023/ND-CP.
  • The sales invoice must clearly state the reduced amount as prescribed in Clause 3, Article 1, Decree 94/2023/ND-CP.

Above are some basic issues businesses need to master when applying Decree 94/2023/ND-CP. The tax reduction policy has taken effect from January 1, 2024, so businesses need to pay attention when selling goods and services.
In addition, if your business wants to learn about VAT reduction policy 2024, please contact us immediately for advice:

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