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Draft policy for 2% VAT reduction, from the current 10% rate to 8%, in Vietnam in 2023.

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Draft policy for 2% vat reduction, from the current 10% rate to 8%, in vietnam in 2023

In April 2023 the Ministry of Finance introduced a draft policy to reduce VAT in Vietnam. Previously, the Vietnamese Government had implemented in 2022 a temporary VAT reduction, through Decree 15/2022/ND-CP (Decree 15), which reduced VAT from 10% to 8% in order to stimulate consumer demand and assist with economic recovery and development post the COVID-19 pandemic. That regulation took effect from 1 February 2022 to 31 December 2022, offering a support package for VAT reduction amounting to VND44,000 billion and demonstrated a positive impact on the development of the economy for the year.


Recognising the results of the VAT reduction policy in 2022 and based on the prevailing economic context in Vietnam, the Ministry of Finance has proposed a 2% VAT reduction from the current rate of 10% down to 8%, which is expected to take effect from the issuance date of the formal Resolution and apply until to the end of 2023. If the policy is applicable for the second half of 2023, the financial benefit has been estimated at VND35,000 billion.

Below we cover some of the key provisions within the draft policy.

The reduction in the VAT rate to 8% is applicable, without exception, to all groups of goods and services in Vietnam that are currently subject to 10% VAT

The draft expanded eligible entities entitled to the VAT reduction when compared to the 2022 implementation, as shown below:

Decree 15 in 2022 (expired)Draft policy in 2023
Applicable entitiesGoods and services applying 10% VAT except for:

– Telecommunications, finance, banking, securities, insurance, real estate business, metals, refined petroleum.

– Products and services subject to Special Consumption Tax.

– Information technology.

Goods and services applying 10% VAT without any exception.

This new proposed provision expanding the applicable goods and services is expected to remove the difficulties in determining the goods and services that are not eligible for VAT reduction that both taxpayers and authorities experienced during the implementation of Decree 15 in 2022.

The VAT reduction in 2023 will be applied consistently in all stages of economic activity: import, production, processing, and trading.

20% reduction in VAT for business entities and individuals which declare VAT following the direct method

Business entities, including business households and business individuals, which declare VAT following the direct method (i.e. percentage on revenue) are entitled to a reduction of 20% of the VAT applied on invoices issued for goods and services subject to 10% VAT.


Contact our teams for expert support and further information on managing corporate compliance in Vietnam.

Phung Nguyen, Accounting Director | Email:
Matthew Lourey, Managing Partner | Email:

Updated on May 16, 2023

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