Vietnam Reduces VAT Rate, Businesses Allowed to Claim CIT Deductions

• Vietnam issued Decree 15 on the implementation of a discount in VAT in addition to CIT deductions for companies.
• As per the Decree, the VAT charge has been lowered to eight p.c from the earlier 10 p.c from February 1 till the tip of the 12 months.
• The authorities could situation additional guiding paperwork on the implementation of the Decree.

Vietnam issued Decree 15/2022/ND-CP (Decree 15) on guiding the implementation and discount of value-added tax (VAT) and company revenue tax (CIT) supporting the nation’s post-pandemic restoration. Decree 15 implements the Nationwide Meeting’s Decision No 43/2022/QH15 on fiscal and financial insurance policies for the restoration of the economic system from the pandemic.

Vietnam Briefing highlights the discount in VAT and tax aid in CIT that companies ought to concentrate on.

VAT discount

The federal government reduce the VAT charge to eight p.c from February 1 to December 31, 2022, for a number of providers. The VAT charge was beforehand 10 p.c.

The VAT discount applies to all items concerned in import, manufacturing, processing in addition to commerce, nonetheless, taxpayers are required to situation a separate bill for items and providers which are eligible for the discount. As well as, they have to declare these items underneath Type 01 as per Decree 15.

There are particular items and providers nonetheless that aren’t eligible for the VAT discount, which incorporates telecom providers, monetary providers, banking, securities, metals, chemical and mining merchandise, actual property, IT items and providers, and items and providers topic to particular consumption tax (SCT). A full listing will be present in Appendix I, II, and Appendix III of Decree 15.

The VAT discount is relevant on each the deduction methodology and the direct methodology.

CIT deduction

Companies can declare a CIT deduction for any donation or sponsorship bills associated to pandemic prevention in Vietnam for the 2022 fiscal 12 months. To do that, companies must submit the related paperwork to avail of the deduction. The quantity of donation or sponsorship should be confirmed in writing by the receiving authority or company.

Decree 15 took impact on February 1, 2022, nonetheless, the federal government could situation additional guiding circulars for implementation of the Decree. The tax breaks are anticipated to assist companies as a result of pandemic and get well manufacturing.