According to the guidance in Official Letter No. 7460/BTC-TCT dated July 29, 2022, construction and installation services are subject to an 8% reduced tax rate.

Mrs. Huyen inquires about how to issue invoices. Should her company issue invoices with the "Contract value..." and apply an 8% reduced value-added tax (VAT) rate, or should they separately specify which items are subject to an 8% reduced rate and which ones are subject to a 10% rate?

The Ministry of Finance responds to this issue as follows:

Based on Decree No. 44/2023/NĐ-CP dated June 30, 2023, issued by the Government, which stipulates the VAT reduction policy in accordance with Resolution No. 101/2023/QH15 dated June 24, 2023, of the National Assembly, the following is stated:

"Article 1. VAT reduction

 1. Reduce VAT for groups of goods and services that are subject to a 10% tax rate, except for the following groups:

a) Telecommunications, financial activities, banking, securities, insurance, real estate business, precast metal and metal products, mining products (excluding coal mining), coke, crude oil, chemical products. Details are provided in Appendix I attached to this Decree.

b) Goods and services subject to special consumption tax. Details are provided in Appendix II attached to this Decree.

c) Information technology as defined by the laws on information technology. Details are provided in Appendix III attached to this Decree.

d) The reduction of VAT for each type of goods and services specified in Paragraph 1 of this Article is uniformly applied at all stages of import, production, processing, and commercial business. Regarding coal sales (including the case of coal mined and then screened, classified according to a closed-loop process before sale), they are subject to VAT reduction. Coal products listed in Appendix I attached to this Decree, at stages other than sales, are not subject to VAT reduction.

... In cases where goods and services listed in Appendices I, II, and III attached to this Decree belong to subjects exempt from VAT or subjects subject to a 5% VAT rate according to the provisions of the VAT Law, they shall be implemented in accordance with the provisions of the VAT Law and are not subject to VAT reduction.

2.  VAT reduction rates

a) Businesses calculating VAT based on the deduction method shall apply an 8% VAT rate to the goods and services specified in Paragraph 1 of this Article...".

Based on Appendices I, II, III, the list of goods and services not eligible for VAT reduction attached to Decree No. 44/2023/NĐ-CP dated June 30, 2023, of the Government.

Based on Decision No. 43/2018/QĐ-TTg dated November 1, 2018, of the Government on the classification of Vietnam's product and service industry system.

Based on Circular No. 219/2013/TT-BTC dated December 31, 2013, of the Ministry of Finance providing guidance for implementing the VAT Law, and Decree No. 209/2013/NĐ-CP dated December 18, 2013, of the Government providing detailed regulations and guidance for implementing certain provisions of the VAT Law:

Article 7 specifies the pricing of VAT:

"... 9. For construction and installation, the price is the value of the work, the work item, or the part of the work that is delivered without VAT.

a) In the case of construction and installation with a material supply contract, the value is the construction and installation value, including the value of materials without VAT...".

If Mrs. Huyen's company has a material supply contract, the VAT calculation is based on the construction and installation value, including the value of materials without VAT, according to the provisions in Point a of Article 9 of Circular No. 219/2013/TT-BTC.

If Mrs. Huyen's company calculates VAT using the deduction method, provides construction and installation services subject to a 10% VAT rate, and does not fall under the categories listed in Appendices I, II, or III, as stated in Decree No. 44/2023/NĐ-CP dated June 30, 2023, by the Government, they should apply an 8% VAT rate, as specified in Paragraph 2 of Article 1 of Decree No. 44/2023/NĐ-CP, effective from July 1, 2023, until December 31, 2023.

It is recommended that Mrs. Huyen consider the specific circumstances, cross-reference the goods and services provided by her company with the legal provisions cited above, and comply with the regulations.

If there are still any uncertainties during the implementation process, she should provide relevant documentation regarding the issues and contact the tax authority for specific guidance.