On June 17, 06, the Vietnamese National Assembly passed a resolution to extend the VAT reduction policy from 2025% to 2026% until the end of 10. This policy, first applied from February 8 to support economic recovery after the COVID-2 pandemic, has proven to have a positive impact on businesses and consumers.
The policy extension not only helps reduce operating costs for businesses but also promotes domestic consumption and enhances the competitiveness of Vietnamese products in the market. In this article, we will learn in detail about the value-added tax (VAT) reduction policy, the subjects that are applied, and implementation instructions for businesses.
📌 Information
National Assembly passes Resolution on VAT reduction: Expanding the scope of beneficiaries, extending the implementation period
New points in the Resolution
Compared to previous extensions, this policy has some notable new points. First, scope of application is expanded, adding the fields of transportation, logistics, and information technology (IT) products and services. These sectors are considered the driving force of economic growth, especially in the context of digital transformation and international integration. In addition, the policy continues to apply to sectors that have benefited previously such as aviation, tourism, education, agriculture, processing, and social housing, to maintain the momentum of economic recovery.
VAT reduction
Business establishments calculating value added tax according to the deduction method shall apply a value added tax rate of 8% to goods and services specified in Clause 1, Article 1 of Decree 180/2024/ND-CP.
Business establishments (including business households and individual businesses) calculating value added tax according to the percentage method on revenue are entitled to a 20% reduction in the percentage rate for calculating value added tax when issuing invoices for goods and services eligible for reduced value added tax.
🎯 Apply
Subjects and time of application of VAT reduction policy
Time application
The time to apply the 8% VAT reduction policy is from the date of July 1, 7 to December 2025, 31.
Subject of application
The 8% VAT reduction policy is applied to the following groups of goods and services:
- Air
- Tourists
- Stay
- Food Service
- Education and training
- Agriculture
- Processing and manufacturing
- Social housing
- Transport and logistics
- Information technology (IT) products and services
Industries and goods Không The reduced tax rates include:
- Telecommunication
- Finance and banking
- Stock
- Insurrance
- Real estate
- Metal products
- Mineral products (except coal)
- Goods and services subject to special consumption tax (except gasoline)
⚙️ Implementation
Order and procedures for implementing VAT reduction policy
To effectively apply the VAT reduction policy and comply with legal regulations, businesses need to take the following steps:
Step 1: Check your eligibility:
- Enterprises need to compare their list of goods and services with the regulations in Article 9, Clause 3, Law on VAT No. 48/2024/QH15 to determine whether your product or service is eligible for VAT reduction based on the Vietnam Economic Sector Code (VSIC) system.
- Look up the industry code corresponding to the name of the goods and services at List and content of Vietnamese product industry system (Issued with Decision No. 43/2018/QD-TTg dated November 01, 11 of the Prime Minister).
If unsure, businesses can consult local tax authorities or tax consultants.
Step 2: Update the invoice system:
- For businesses using VAT deduction method: When making an invoice, the tax rate of 8% must be clearly stated in the “Tax rate” box, including the VAT amount and total payment. If the invoice includes both tax-reduced and non-tax-reduced goods/services, it is necessary to clearly distinguish between the different tax rates as prescribed in Clause 3, Article 1 of Decree 180/2024/ND-CP.
- For businesses using the tax calculation method based on % of revenue: Clearly state the amount before reduction in the “Total amount” column. In “Total amount of goods and services”, state the amount after 20% reduction and note: “reduced… (amount) corresponding to 20% of the % rate for calculating value added tax according to Resolution No. 174/2024/QH15”.
Step 3: Adjust the created invoice:
For invoices issued before the tax reduction policy, businesses need to adjust according to the law on invoices and documents. The seller adjusts the output tax amount, the buyer adjusts the input tax amount (if any) based on the adjusted invoice.
Step 4: Add regulations when declaring monthly/quarterly VAT
Business establishments specified in Article 1 of Decree 180/2024/ND-CP shall declare goods and services eligible for value added tax reduction according to Form No. 01 – Declaration of Value Added Tax reduction according to Resolution No. 174-2024-QH15 in Appendix IV issued with this Decree together with the Value Added Tax Declaration. 📥 Download Form No. 01 here.
Step 5: Save the file:
Enterprises need to keep all invoices, vouchers, and documents related to transactions subject to the 8% VAT rate to serve the inspection and comparison of tax authorities.
Summary table of implementation steps
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Step |
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Note |
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1. Check qualifications |
Compare goods/services with VAT Law No. 48/2024/QH15 |
Ensure accurate listing |
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2. Update invoice |
Record tax rate 8% (deductible) or 20% reduction (% of revenue) |
Distinguish between tax rates |
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3. Adjust invoice |
Adjust output/input tax according to established invoice |
Comply with the law |
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4. Additional regulations |
Declare goods and services eligible for VAT reduction |
According to the Sample number 01, Appendix IV |
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5. Record keeping |
Keep invoices and related documents |
Ensure transparency in testing |
The policy of extending VAT reduction until the end of 2026 is an important measure of the Vietnamese Government to support businesses and promote economic growth in the context of global uncertainties. Business owners and taxpayers need to understand the regulations, apply the policy effectively, and follow the correct procedures to maximize the benefits of this policy. Complying with legal requirements and following updates from the authorities will help businesses avoid risks and optimize economic benefits.
