Vietnam's General Department of Taxation (GDT) has published Decree No. 15/2022/ND-CP of 28 January 2022, which provides for the implementation of Resolution 43/2022/QH15. As previously reported, the resolution was approved by Vietnam's National Assembly earlier in January to provide relief measures meant to support growth and recovery from the effects of the COVID-19 pandemic.
In particular, the decree provides implementing rules for the tax exemption and reduction policies of the resolution, including a reduction in the VAT rate to 8% for goods and services normally subject to the standard 10% VAT rate, except for:
The VAT rate reduction is to be applied uniformly at the stages of import, production, processing, business, and trade. Businesses that calculate VAT by the standard credit method may apply the 8% VAT rate directly, while businesses that calculate VAT based on the percentage of revenue/turnover method (direct method) are entitled to a 20% reduction in percentage rate applied in calculating VAT for qualifying goods and services. All businesses must issue separate invoices for supplies eligible for the VAT reduction. If separate invoices are not issued, a business will not be entitled to the VAT reduction. If invoices are issued without the VAT reduction for qualifying supplies, a correcting invoice may be issued.
In addition to the VAT reduction, the Decree also provides implementing rules for the deduction of donations for COVID-19. This includes that corporate taxpayers are allowed to treat donations made to support and finance COVID-19 epidemic prevention and control activities as a deductible expense when determining taxable income in 2022. Such donations must be made to qualifying units, which includes government units at different levels, health facilities, armed forces units, organizations assigned by competent state agencies, certain COVID-19 funds, and others.
The Decree is effective from 1 February 2022. The VAT reduction applies from 1 February to 31 December 2022, while the donation deduction rules apply for the entire 2022 corporate income tax period.