VAT Reduction in Vietnam: What the 8 Percent Rate Covers

VAT reduction in Vietnam lets shops charge 8 percent value added tax instead of the normal 10 percent on many goods and services. The lower rate was extended from July 1, 2024. On November 30, 2024, lawmakers voted to keep it going for another six months, to June 30 of next year. This note explains who gets the lower rate and how you can check it.

What changed and when

The National Assembly passed Resolution 142/2024/QH15 on June 29, 2024. It extended the 8 percent rate, two points below the standard 10 percent, for July 1 to December 31, 2024. On a bill of 1,000,000 dong before tax, the VAT falls from 100,000 dong to 80,000 dong.

Before that period ended, the National Assembly passed Resolution 174/2024/QH15. It keeps the 8 percent rate for the six months from January 1 to June 30 of next year. The resolution sets no date beyond that, so plan only up to the end of June.

The cut applies to goods and services that normally carry the 10 percent rate. Goods that already carry 5 percent or 0 percent, or that are exempt, are not changed by it.

Sources: National Assembly of Vietnam, Resolution 142/2024/QH15 and Resolution 174/2024/QH15 on the VAT reduction.

Which goods and services get 8 percent

The 8 percent rate is the exception to the rule. It reaches most everyday goods and services that were at 10 percent. Think of many household items, restaurant meals, repairs and ordinary business services.

The resolutions also list groups that do not get the cut. These include some sectors such as telecommunications, finance, banking, securities, insurance and real estate. Metal and mining products, and some chemical products, are on the list too. Goods that carry special consumption tax are on it as well, with petrol the one named exception. The exact list sits in the resolution text, and the details change by product code, so read the text before you rely on a rule of thumb.

If a seller sells both kinds of item, each line is taxed on its own rate. A single receipt can show 8 percent on one item and 10 percent on another.

Sources: National Assembly of Vietnam, Resolution 142/2024/QH15 and Resolution 174/2024/QH15.

How to read an invoice

Start with the VAT rate column. For an item that gets the cut, it should show 8 percent. The tax amount beside it should equal 8 percent of the price before tax.

Do a quick sum yourself. Multiply the price before tax by 0.08. If the tax shown is closer to 10 percent of that price, ask the seller why. An item may be excluded from the cut, or the seller may have used the wrong rate.

Then check the total. The price before tax plus the VAT should equal the amount you pay. Keep the invoice. You will need it if you correct a mistake or claim input tax later.

Ask for a VAT invoice when you buy for a business. A plain receipt may not let you claim the tax back.

What small firms should do

If you sell goods, sort your product list into two groups. One group gets 8 percent. The other stays at 10 percent, or at another rate it always had. Set the rate for each item in your billing system, not by hand on each sale.

Check supplier invoices too. Your suppliers may charge you 8 percent on some items and 10 percent on others. Your records should match what is printed on the invoice.

Plan your prices. If you list prices with tax included, a drop from 10 percent to 8 percent changes how much of the price is tax. Decide whether to lower the shelf price or keep it and earn a little more on each sale. Either way, show customers the tax line clearly.

When the cut ends, the rate returns to 10 percent for goods that now sit at 8 percent. Set a reminder for the end of June so your system changes on the same day.

What this means for shoppers

For a household, the saving is small on each purchase and adds up over a year. On 10,000,000 dong of taxable spending before tax, the cut saves about 200,000 dong.

Do not expect every shelf price to fall by exactly two percent. A seller may round prices or keep them the same. The rule sets the tax rate. It does not set the price on the shelf.

If you pay for goods that sit outside the cut, such as certain finance or telecom services, you will still see 10 percent. That is not an error. Compare against the list in the resolution before you complain.

Where to check the rules yourself

Use the full text of the resolutions rather than a summary. The National Assembly publishes them, and the General Department of Taxation posts guidance for businesses. If your case is complex, ask a licensed tax adviser. This note is general information, not tax advice.

Sources: National Assembly of Vietnam, Resolution 142/2024/QH15 and Resolution 174/2024/QH15; General Department of Taxation, guidance on the VAT reduction.

Sources
National Assembly of Vietnam, Resolution 142/2024/QH15. National Assembly of Vietnam, Resolution 174/2024/QH15.