Summary of VAT Reductions from 10% to 8% Businesses and Accountants Need to Know

To support businesses and citizens in overcoming economic difficulties, the Vietnamese government has issued numerous VAT reduction policies in recent years. Reducing VAT from 10% to 8% not only lowers input costs for businesses but also stimulates consumption and boosts economic demand. Below is a detailed summary of the VAT reduction stages from 10% to 8%, along with relevant policies and regulations that businesses and accountants should note.

1. VAT Reduction from July 1, 2025, to December 31, 2026
   On June 30, 2025, the government issued Decree No. 174/2025/ND-CP regulating the VAT reduction policy following Resolution 204/2025/QH15 of the National Assembly. The decree takes effect from July 1, 2025, to December 31, 2026, maintaining the VAT rate reduction from 10% to 8%.
   New points in Decree 174/2025/ND-CP include:

• Removal of many goods excluded from VAT reduction in Appendices I and II such as coal, refined petroleum products, chemical products, cast metal products, gasoline, and some air conditioning products…
• Abolition of IT goods and services excluded from VAT reduction in Appendix III of Decree 180/2024.
  VAT reduction levels applied:
• Businesses applying VAT deduction method: VAT rate reduced from 10% to 8% for eligible goods and services.
• Businesses using VAT calculation by percentage of revenue: 20% reduction in the VAT rate percentage when issuing invoices.

2. VAT Reduction from January 1, 2025, to June 30, 2025
   The National Assembly continued the VAT reduction policy with a 2% decrease for the first six months of 2025 under Resolution 174/2024/QH15. Specifically, goods and services under the specified groups will have the VAT rate reduced to 8%.
   The government is tasked with organizing the implementation and ensuring state budget balance in 2025.
3. VAT Reduction from July 1, 2024, to December 31, 2024
   The Ministry of Finance issued Decree 72/2024/ND-CP applying an 8% VAT rate for the last six months of 2024 for certain sectors, goods, and services.
   Reduction methods:

• Deduction method: VAT rate reduced from 10% to 8%.
• Percentage of revenue method: 20% reduction in the VAT calculation rate when issuing invoices.

4. VAT Reduction from January 1, 2024, to June 30, 2024
   The policy to reduce VAT from 10% to 8% continued according to Decree 94/2023/ND-CP issued on December 28, 2023, with regulations unchanged from previous reductions, helping businesses reduce costs and improve competitiveness.
5. VAT Reduction from July 1, 2023, to December 31, 2023
   According to Decree 44/2023/ND-CP issued on June 24, 2023, Vietnam continued reducing VAT from 10% to 8% for many goods and services until the end of 2023.
   Highlights:

• Added VAT reduction for coal products sold by extraction companies.
• Amended regulations on handling invoices issued and declared with incorrect tax rates.
• Updated HS codes for goods and services according to the latest import-export lists.

6. The First VAT Reduction from 10% to 8%: February 1, 2022, to December 31, 2022
   On January 28, 2022, the government issued Resolution 43/2022/QH15 and Decree 15/2022/ND-CP officially reducing VAT from 10% to 8% for certain goods and services to support economic recovery post-COVID-19.
   Groups excluded from VAT reduction include:

• Telecommunications, financial activities, banking, securities, insurance, real estate.
• Metals and cast metal products, mining products (excluding coal mining), coke, refined petroleum, chemicals.
• Goods and services subject to special consumption tax.
• Information technology according to the law.

Benefits of VAT Reduction Policy for Businesses and the Economy
The continuous VAT reductions in recent years have helped:

• Reduce production and business costs for enterprises.
• Increase competitiveness of domestic goods and services.
• Stimulate consumption and investment.
• Support economic recovery after the COVID-19 pandemic and global economic fluctuations.

Conclusion
The reduction of VAT from 10% to 8% is a key government solution to support businesses and citizens. Businesses and accountants must clearly understand the timelines and regulations to accurately declare and calculate taxes, comply with the law, and maximize benefits from this policy.