DECREE 15 GUIDING TAX EXEMPTIONS AND REDUCTIONS
On 28 January 2022, the Government officially issued Decree 15/2022/ND-CP (“Decree 15”) prescribing tax exemptions and reductions under Resolution No. 43/2022/QH15 of the National Assembly, on fiscal and monetary policies for supporting socio-economic recovery and development program (“Resolution 43”). The key points of Decree 15 are summarized below:
1. VAT reduction from 01 February 2022 to 31 December 2022
Value Added Tax (“VAT”) shall be reduced from 10% to 8% for goods and services which are currently subject to the 10% VAT rate (except some listed goods and services specified in Appendix I issued with Decree 15 including the following groups of goods and services:
(i) The telecommunications and information technology industries;
(ii) Financial services including banking; securities and insurrance;
(iii) Real estate business;
(iv) Metal production and prefabricated metal products manufacturing, the mining industry (excluding coal mining), production of coke, refined petroleum, and production of chemicals and chemical products; and
(v) Goods and services subject to special sales tax.
• For business applying the credit method: apply 8% VAT rate for goods and services subject to the application (Apply reduction directly on VAT invoices);
• Business applying the direct method (percentage on revenue): reduce the VAT rate by 20% for goods and services subject to the application.
• Procedure to apply VAT reduction: Apply reduction directly on VAT invoices.
Individuals and businesses need to declare and pay VAT according to the detailed instructions specified in Decree 15.
2. Deductible expenses upon determination of taxable corporate income
Resolution 43 permits corporations and organizations to deduct contribution and sponsorship expenses for Covid-19 prevention and control measures in Vietnam for the tax period year 2022. In addition, in case a parent company gives donations and/or sponsors on behalf of its subsidiaries, the parent company and its subsidiaries may include their corresponding donations and/or sponsors in their deductible expenses when calculating taxable corporate income
Decree 15 also details the recipients of donations and/or sponsorships and the relevant supporting documents in order to claim deductible expenses for certain donation support and/or sponsorship expenditures.