Reduction of VAT to 8% from February 1, 2022 for some goods and services

Reducing value added tax for groups of goods and services currently applying the tax rate of 10%, except for some groups of goods and services.

Decree 15/2022/ND-CP stipulates: Reducing value-added tax for groups of goods and services currently applying the tax rate of 10%, except for the following groups of goods and services:

a- 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.

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

c) Information technology according to the law on information technology. Details are in Appendix III issued together with this Decree.

d/ The value-added tax reduction for each type of goods and services specified above shall be applied uniformly at the stages of importation, production, processing, business and trade. For coal sold for sale (including the case of coal mined and then screened, classified according to a closed process, 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 stages other than mining and sale.

In case 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 the Law on Value-added tax shall comply with the provisions of the Law on Value-Added Tax and may not reduce value-added tax.

Value-added tax reduction

The Decree stipulates the value-added tax reduction as follows:

1- Business that calculate value-added tax by the method of deduction may apply the value-added tax rate of 8% for goods and services specified above.

2- Business (including household business and individual business ) that calculate value-added tax according to the percentage method on turnover are entitled to a reduction of 20% of the percentage rate to calculate value-added tax when issue invoices for goods and services eligible for value-added tax reduction as prescribed above.

The Decree clearly states that business establishments must make separate invoices for goods and services eligible for value added tax reduction. In case a business establishment does not issue a separate invoice for goods and services eligible for value-added tax reduction, it is not entitled to a reduction of value-added tax.

In case the business establishment has issued an invoice and declared at the tax rate or percentage to calculate the value added tax that has not been reduced as prescribed in this Decree, the seller and the buyer must make a written record or there must be a written agreement specifying the error; silmutaneously seller makes an invoice to correct the error and delivers the adjusted invoice to the buyer. Based on the adjusted invoice, the seller declares and adjusts the output tax, and the buyer declares the adjustment of input tax (if any). 

In case a goods or service business establishment eligible for value-added tax reduction has issued an ordered invoice printed in the form of a pre-printed ticket with its unused face value (if any) and has a need to continue In case of continued use, business establishments shall make stamps according to the price that has been reduced by 2% of the value-added tax rate or the price that has been reduced by 20% of the percentage rate next to the pre-printed price criterion for continued use.

Business establishments specified in this Article shall declare value-added tax-reduced goods and services according to Form No. 01 in Appendix IV issued together with this Decree together with the value-added tax declaration. .

The above regulations apply from February 1, 2022 to the end of December 31, 2022.

Deductible expenses when determining taxable income

The Decree stipulates that enterprises and organizations that are taxpayers of corporate income according to the provisions of the Law on Corporate Income Tax shall be included in deductible expenses when determining taxable income of the corporate income in 2022 for donations and sponsorships in cash and in kind for COVID-19 prevention and control activities in Vietnam through support and sponsorship units.

In case the company receives support and sponsorship from member units to focus on conducting supporting and sponsoring activities, that company and member units are included in the deductible expenses unless determine the taxable income corresponding to the support and sponsorship of the parent company and each member unit. The parent company must have a Minutes or a document or certificate detailing the expenditure for support or sponsorship. The member unit must have legal invoices and documents in accordance with the law and have a written certification of the parent company about the support and sponsorship of each member unit.   

Units receiving support and funding are: Vietnam Fatherland Front Committees at all levels; health facilities; armed forces units; units and organizations assigned by competent state agencies to serve as concentrated isolation establishments; educational institutions; press agency; ministries, ministerial-level agencies and agencies attached to the Government; party organization, youth union, trade union, and Vietnam Women's Union at all levels; local government agencies and units at all levels have the function of mobilizing funding; funds for COVID-19 prevention and control at all levels; COVID-19 vaccine fund; National humanitarian portal; Charity and humanitarian funds and organizations with the function of mobilizing funding established and operate in accordance with law.

Nghị định yêu cầu Ủy ban nhân dân các tỉnh, thành phố trực thuộc trung ương chỉ đạo các cơ quan liên quan tại địa phương tăng cường phối hợp, trao đổi, cung cấp thông tin cho cơ quan thuế, cơ quan hải quan để quản lý chặt chẽ, xử lý nghiêm hành vi nâng giá trị, khai giá trị bất hợp lý trong hoạt động ủng hộ, tài trợ; phối hợp quản lý chặt chẽ giá mua bán hàng hóa, dịch vụ, hóa đơn cung cấp hàng hóa, dịch vụ và xử lý các trường hợp giá mua bán trên hợp đồng, giá trên hóa đơn cung cấp hàng hóa, dịch vụ không đúng với thực tế theo quy định của pháp luật.

The units receiving donations and sponsorships are responsible for using and distributing for the right purposes of the received donations and sponsorships for COVID-19 prevention and control activities. In case of misusing the donation or sponsorship, it will be handled in accordance with the law.

The Decree requires the People's Committees of the provinces and centrally run cities to direct relevant local agencies to strengthen coordination, exchange and provide information to tax and customs authorities for management. strictly manage and strictly handle acts of raising value, declaring unreasonable values ​​in support and sponsorship activities; cooperate in closely managing the purchase and sale prices of goods and services, invoices for the provision of goods and services, and handle cases where the purchase and sale prices on contracts and prices on invoices for provision of goods and services are not correct. with reality according to the provisions of law.

The regulations on deductible expenses when determining taxable income are applied for the corporate income tax period of 2022.

Vu Phuong Nhi

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