February 2022 Tax Updates: Decree reducing VAT to 8%, and new solutions to support the recovery of businesses, cooperatives, and business households.

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February 2022 Tax Updates: Decree reducing VAT to 8%, and new solutions to support the recovery of businesses, cooperatives, and business households

This February 2022 publication of our Tax and Accounting Updates looks at Decree 15/2022/ND-CP reducing VAT to 8% from 1 February 2022, instructions how to declare VAT at 8% on the VNACCS/VCIS system, strict handling of cases where 2% VAT discount is not applied to invoices, new solutions to support the recovery of businesses, cooperatives, and business households, and regulations on provision of electronic contract authentication services.

Decree 15/2022/ND-CP reducing VAT to 8% from 1 February 2022

On 28 January 2022, the Government released Decree 15/2022/ND-CP providing tax exemption and reduction policies under Resolution 43/2022/QH15 to support social-economic recovery and development, with the highlight being the reduction of VAT from 10% to 8 % from 1 February 2022.

Key points of the Decree include:

  1. Value-added tax (VAT) reduction for goods and services currently applying the tax rate of 10%, except for goods and services in: telecommunications, information technology, finance activities and banking, insurance, stock trading, real estate business, metal production and mining industries (except coal), petroleum, chemicals, and commodities and services that are subject to special consumption tax.
  2. Reduction of the VAT rate to 8% for business establishments that calculate VAT by the credit method and a reduction of 20% for business establishments that calculate VAT according to the percentage method on revenue.
  3. Different order and procedures for implementation for business establishments that calculate VAT by the credit method and according to the percentage method on revenue.
  4. Other mentioned support policies regarding instructions to determine the deductible expenses for COVID-19 when calculating CIT 2022.

We have released a Client Alert delving into the details on these updates, please read our detailed article here: https://vietnam.acclime.com/news-insights/the-authorities-approve-a-2-vat-reduction-on-applicable-goods-and-services-starting-with-february-2022/

Instructions how to declare VAT at 8% on the VNACCS/VCIS system

On 28 January 2022, the General Department of Customs issued Official Letter 370/TCHQ-TXNK on the implementation of Decree 15/2022/ND-CP, requesting provincial and municipal Customs Departments to guide taxpayers on preparing customs declarations:

  • Select the correct code VB195 to declare the VAT rate of 8%. Code VB195 does not apply to cases not subject to VAT or subject to VAT rates of 0%, 5%, and 10%.
  • Declaration of code VB195 only applies to customs declarations registered from 0:00 on 1 February 2022 (based on the registration date on the face of the customs declaration).

Where the customs declaration is registered before 0:00 on 1 February 2022 (with the registration date on the face of the customs declaration before 0:00 on the effective date of the Decree), the 8% VAT rate will not be applied.

Strict handling of cases where 2% VAT discount is not applied to invoices

Official Letter 02/CD-TCT dated 9 February 2022 from the General Department of Taxation was released to promote the implementation of the VAT reduction following the provisions of Resolution 43/2022/QH15 of the National Assembly and Decree 15/2022/ND-CP of the Government.

To ensure that taxpayers benefit from the VAT reduction policy, the General Department of Taxation has asked the provincial Tax Departments to promote and urge businesses and business establishments in the area to reduce VAT by 2% on invoices for eligible goods and services under Resolution 43/2022/QH15 and Decree 15/2022/ND-CP.

For deliberate violations which still collect 10% VAT on invoices, there are to be strictly handled in accordance with laws.

New solutions to support the recovery of businesses, cooperatives, and business households

On 30 January 2022, the Government issued Resolution 11/NQ-CP on the program for social-economic recovery and development and implementation of Resolution 43/2022/QH15 of the National Assembly on financial and monetary policies supporting the program. In addition to reducing the VAT rate to 8%, the Government also introduced new solutions to support the recovery of businesses, cooperatives, and business households. Some of the highlights are as follows:

  • Extension of payment deadlines for CIT, PIT, VAT, excise tax, and land rent in 2022.
  • Interest rate support of 2% per year for 2 years from 2022 to 2023 through the system of commercial banks for commercial loans to businesses, cooperatives, and business households that are able to repay, have recovery in industries and fields. Support conditions: Belonging to beneficiaries, have received loans or meet loan conditions, and are approved by commercial banks.
  • Research to stabilise the maximum ratio of short-term capital for medium and long-term loans, reasonably calculate the required reserve ratio, perform open market operations, refinance, and direct credit institutions to continue to reduce operating costs to strive to reduce lending interest rates by about 0.5% – 1% in 2022 and 2023, especially for priority sectors.
  • Continue to restructure the repayment term, exempt and reduce loan interest and maintain the same debt group for customers affected by the COVID-19 epidemic, closely monitor economic and monetary market developments for appropriate solutions to support businesses and people, and at the same time ensure the safe operation of the system of credit institutions.
  • Increase charter capital from after-tax profits after setting aside funds for the 2021 – 2023 period for joint-stock commercial banks where the State holds more than 50% of charter capital and from the state budget for the Bank. Products of Agriculture and Rural Development.
  • Review and amend regulations to remove obstacles in regulations on expenditures and management of enterprises’ Science and Technology Development Fund; create favourable conditions for enterprises for technological innovation, technology incubation, science and technology business incubation, commercialisation of scientific research and technological development results; decoding technology; purchase equipment, machinery and raw materials for technological innovation, directly serving production and business activities of enterprises.

Regulations on provision of electronic contract authentication services

This content is specified in Circular 01/2022/TT-BCT on amending Circular 47/2014/TT-BCT on the management of e-commerce websites, and Circular 59/2015/TT-BCT on the management of e-commerce by applications on mobile phones.

According to the Circular, a regulation on electronic contract authentication services must be publicised on home pages of the websites and include the following contents:

  • Rights and obligations of traders and service providers
  • Rights and obligations of service users
  • Description of media and processes of electronic contract authentication
  • Limitation of the obligations of traders and providers of electronic contract authentication services
  • Regulations on information security and management of provision of electronic contract authentication services
  • Mechanisms for handling complaints and disputes among parties relevant to provision of electronic contract authentication services
  • Actions against violations of regulations

Circular 01/2022/TT-BCT comes into force from 8 March 2022.

 

For more information on tax updates and other compliance requirements for businesses operating in Vietnam, follow our monthly releases on the website and social media channels at vietnam.acclime.com.

Last updated on February 15, 2022
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