VIETNAM CUTS VAT TO 8% TILL YEAR END 2024

The Government of Vietnam issued a decree on June 30, reducing the value-added tax (VAT) on goods and services from July 1 to December 31 2024.

This move follows a National Assembly resolution adopted on June 29.

VAT Reduction

The VAT rate will be reduced from 10% to 8%, a cut that has been in place since 2022. However, this reduction does not apply to certain services and products, including:

• Telecommunications
• Finance
• Banking
• Security
• Insurance
• Real estate business
• Coke and chemical products
• Goods and services subject to special consumption tax

This VAT reduction has been consistently applied across import, export, production, and trade sectors. The decree also outlines the procedures for implementing this tax incentive.

Fee and Charge Reductions

Additionally, starting July 1, several fees and charges will be reduced until the end of the year to alleviate obstacles for enterprises and support their business activities. This is in line with a circular from the Ministry of Finance. Key reductions include:

• 50% Decrease:
  • Fees for the establishment and operation of banks and non-bank credit institutions
  • Issuance of citizen identification cards
  • Registration of intellectual property protection
  • Appraisal and approval of fire prevention and fighting designs
  • Use of railway infrastructure
• 10-30% Decrease:
  • Fees for issuing licenses and permits for civil aviation operations
  • Entry and exit permits for restricted airport areas
  • Customs fees for foreign flights landing in Vietnam

The securities industry will see a 50% reduction in most fees and charges, except for licensing fees of securities professionals and supervision fees for securities activities.

This is the fourth instance of the Ministry imposing fee reductions of 10-50%, with an estimated budgetary impact of about VND 700 billion (US$29.1 million).