Subject to Reduced Value Added Tax (VAT)
Mr. Huynh Van Phong's company operates in the construction sector, specializing in executing projects funded by the state budget.
Based on Government Decree No. 44/2023/NĐ-CP dated June 30, 2023, which stipulates the VAT reduction policy, the value of construction work performed from July 1, 2023, to December 31, 2023, must be invoiced at a tax rate of 8%.
Accordingly, when carrying out construction contracts with the project owner, Mr. Phong's company issues invoices for the construction value at an 8% tax rate. Within this quantity, Mr. Phong has entered into a contract with another entity to supply and install aluminum and glass work.
Mr. Phong is inquiring whether the entity supplying and installing aluminum and glass should invoice his company at 8% or 10%.
The Tax Department of Binh Duong Province responds to this matter as follows:
In Article 42, Clause 2 of the Tax Management Law No. 38/2019/QH14 (effective from July 1, 2020), it is stipulated that the principle of tax declaration and calculation is: "Taxpayers shall calculate the amount of tax payable, except in cases where tax calculation is conducted by the tax authority in accordance with the Government's regulations."
Based on Government Decree No. 44/2023/NĐ-CP dated June 30, 2023, which establishes the VAT reduction policy according to Resolution No. 101/2023/QH15 dated June 24, 2023, of the National Assembly.
In reference to Decision No. 43/2018/QĐ-TTg dated November 1, 2018, by the Prime Minister regarding the issuance of the Vietnam Product Industry System;
Based on the above regulations, the Tax Department of Binh Duong Province provides the following principle to Mr. Phong:
If your company's industry code (according to Decision No. 43/2018/QĐ-TTg dated November 1, 2018, by the Prime Minister) does not fall under Appendices I, II, and III attached to Government Decree No. 44/2023/NĐ-CP dated June 30, 2023, then it falls within the category eligible for VAT reduction according to the provisions of this Decree.
Your company should refer to Decision No. 43/2018/QĐ-TTg and Appendices I, II, and III of Government Decree No. 44/2023/NĐ-CP to determine the applicable VAT rate for the goods and services sold by your company.
We recommend that Mr. Huynh Van Phong follow the guidance provided above and reconcile it with the actual situation at his organization to comply with the regulations.
The above is the guidance provided by the Tax Department of Binh Duong Province to Mr. Huynh Van Phong.
By: Mai Chi (Government’s newspaper)/Translator: LeAnh-Bizic
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