Vietnam reduces VAT rate to 8% from 1 July 2023

3 August 2023

On 30 June 2023, the Government of Vietnam issued Decree No. 44/2023/ND-CP to implement the value added tax (“VAT”) rate reduction policy (“Decree 44”) passed by the National Assembly on 24 June 2023 in accordance with Resolution No. 101/2023/QH15 (“Resolution”). The Resolution reduced the VAT rate from 10% to 8% for the period 1 July 2023 to 31 December 2023.

Goods and services which are currently subject to 10% VAT will be entitled to a reduced VAT rate of 8%, except for the following:

• Telecommunications, financial services, banking, securities, insurance, real estate trading, metal and products made from prefabricated metal, mining products (except coal mining), coke, refined petroleum, and chemical products;
• Goods and services subject to excise tax; and
• Information and technology products and services as prescribed in the Law on Information Technology.

Decree 44 provides that the 8% VAT rate will be applied consistently at all stages including at importation, production, processing and trading. Coal products mined for sale, including those that are mined, washed, sieved and classified under a closed process before they are sold, are eligible for VAT reduction only at the mining stage.

The procedure for filing VAT and indicating the rate paid is set out in Decree 44, which provides guidance on invoicing.

Application to imported goods

In tandem with the issuance of Decree 44, the General Department of Vietnam Customs issued Official Letter No. 3431/TCHQ-TXNK on 30 June 2023 (“Letter”), providing guidance on the implementation of the reduced VAT rate on imported goods. The Letter confirms that the reduced rate will apply to imported goods on the same terms as set out in Decree 44.