1. Resolution 11 provides various measures to support businesses
On 30 January, the Government issued Resolution 11/NQ-CP on socio-economic recovery measures and implementation of Resolution 43/2022/QH15 on fiscal and monetary policies.
Below are some notable points:
Among various solutions set out in Resolution 11, we highlight some notable tax measures:
- 2% VAT reduction in 2022 which the Government has released Decree 15/2022 to provide guidance in this respect.
- Extension of the deadline for payment of VAT (in addition to CIT, PIT, SST and land rental) in 2022.
It is envisaged that the Government will provide implementing guidance for certain of the above measures soon.
2. Decree 15/2022 guiding the 2% VAT rate cut in 2022
Following Resolution No. 43/2022/QH15 (fiscal and monetary policies) to support the Socio-Economic Development and Recovery Program, the Government has just released Decree 15/2022 on 28 January. This provides guidance on the 2% VAT reduction, which took effect from 1 February 2022, as follows:
- The 2% VAT reduction will be applicable to goods and services which are currently subject to 10% VAT (with certain exceptions). Decree 15 provides the lists of goods and services not entitled to the 2% VAT reduction with details of product codes and HS codes.
- The 2% VAT reduction for eligible goods/ services will be consistently applied for all stages from importation, manufacturing, processing, and trading. However, it is important to note that this VAT reduction does not apply to coal exploitation.
- The effectiveness of the 2% VAT reduction will be from 1 February 2022 to 31 December 2022 (inclusive).
- For companies declaring VAT under the deduction method, the VAT rate will be stated as “8%” on VAT invoices. Importantly, companies are required to issue separate VAT invoices for goods/services being entitled to 2% VAT reduction.
- In the case that invoice adjustments are required, i.e., if the seller has issued VAT invoices for eligible goods/ services with the normal 10% VAT rate without considering this 2% VAT reduction, then the seller and the buyer must prepare minutes or a written agreement specifying the mistakes, and the seller should issue an adjustment invoice. Based on the adjustment invoice, the seller and the buyer should adjust the output VAT and input VAT.
- The goods/ services subject to 2% VAT reduction should be declared on Form 01 promulgated under Decree 15 which has to be submitted together with the VAT returns.
Further guidance on 2% VAT reduction is provided in the Official letter 2688/BTC-TCT, dated 23 March 2022 and issued by the MOF to all provincial tax departments. Please see key points as follows:
- List of goods not subject to 2% VAT reduction; provincial tax departments should guide the taxpayers to compare between the goods/ services produced/ traded by the taxpayers with the goods/ services that fall under the exception list under Decree 15 for which 2% VAT reduction is not allowable.
- Timing for issuance of invoices and the availability of 2% VAT reduction:
- For invoices issued before 1 Feb 2022 to collect the service fees in advance with the VAT rate of 10%, whereby the services will be performed from 1 Feb to 31 Dec 2022, then no VAT reduction would be available for such invoices. For the remaining service fee where invoices are issued from 1 Feb to 31 Dec 2022, VAT reduction can be applied.
- Where goods or services were provided in Jan 2022, but invoices were issued in Feb 2022 then VAT reduction can’t be applied.
- For invoices issued before 1 Feb 2022 with the VAT rate of 10% but there were mistakes and the goods value and/ or VAT amount need to be changed or the goods need to be returned after 1 Feb 2022, then the adjustment invoices or invoices to return goods are still subject to the VAT rate of 10%.
- For special goods or services such as electricity, VAT reduction can be applied for invoices issued from 1 Feb to 31 Dec 22.
