On 31 December 2024, the Government issued Decree 180/2024/ND-CP (“Decree 180”) stipulating the VAT reduction policy according to Resolution 174/2024/QH15 of the National Assembly.

Decree 180 stipulates the 2% VAT reduction applicable to goods and services that are currently subject to 10% of VAT, except for: 

(i) Telecommunications, banking and financial activities, securities, insurance, real estate business, metals and prefabricated metal products, mining products (excluding coal mining), coke, refined petroleum, and chemical products; 
(ii) Products and services subject to excise tax; and 
(iii) Information technology as indicated in the law on information technology.

The VAT reduction is consistently applied across all stages, including import, production, processing, and commercial trading.

VAT reductions are applied as follows: 

1. VAT payers filing VAT under the credit method apply 8% VAT on the output invoice; or  
2. VAT payers filing VAT under the direct method (i.e. VAT payable calculated as a percentage of sale revenues) apply a 20% reduction to sale revenues for VAT calculations.

The VAT reduction under Decree 180 is in effect from 1st January 2025 until the end of 30 June 2025.

Disclaimer: This publication is for general update. This should not constitute our professional advice for a particular case, entity, or individual. Should you need further information or our professional assistance for your specific cases, please feel free to contact us.

Dentons LuatViet acknowledges and thanks Trainee Associate Linh Nguyen for her contribution to the article.