Vietnam Reduces VAT Rate, Businesses Allowed to Claim CIT Deductions
- Vietnam issued Decree 15 on the implementation of a reduction in VAT as well as CIT deductions for businesses.
- As per the Decree, the VAT rate has been reduced to 8 percent from the previous 10 percent from February 1 until the end of the year.
- The authorities may issue further guiding documents on the implementation of the Decree.
Vietnam issued (Decree 15) on guiding the implementation and reduction of value-added tax (VAT) and corporate income tax (CIT) supporting the country’s post-pandemic recovery. Decree 15 implements the National Assembly’s Resolution No 43/2022/QH15 on fiscal and monetary policies for the recovery of the economy from the pandemic.Vietnam Briefing highlights the reduction in VAT and tax relief in CIT that businesses should be aware of.
VAT reductionThe government cut the VAT rate to 8 percent from February 1 to December 31, 2022, for several services. The VAT rate was previously 10 percent.
CIT deductionBusinesses can claim a CIT deduction for any donation or sponsorship expenses related to pandemic prevention in Vietnam for the 2022 fiscal year. To do this, businesses need to submit the relevant documents to avail of the deduction. The amount of donation or sponsorship must be confirmed in writing by the receiving authority or agency. Decree 15 took effect on February 1, 2022, however, the government may issue further guiding circulars for implementation of the Decree. The tax breaks are expected to help businesses due to the pandemic and recover production.
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