Vietnam: VAT rate reduction; corporate income tax deduction of certain COVID-19-related expenses

Tax relief measures relating to a reduction of VAT and deductibility for corporate income tax purposes of COVID-19-related expenses

VAT rate reduction; corporate income tax deduction of certain COVID-19-related expenses

Decree 15/2022/ND-CP (28 January 2022) implements tax relief measures relating to a reduction of value added tax (VAT) and the deductibility for corporate income tax purposes of COVID-19-related donations and sponsorship expenses. Decree 15 takes effect from 1 February 2022.

Reduction of VAT rate

The VAT for goods and services currently subject to the rate of 10% is reduced to 8%, applicable from 1 February 2022 to 31 December 2022.

Decree 15 provides a list of exceptional goods and services which are not eligible for the VAT reduction.

The VAT reduction is applicable consistently to all stages including import, manufacturing, processing and trading. But, taxpayers must issue a separate invoice for goods and services eligible for the VAT reduction.

Taxpayers must declare the list of goods and services eligible for the 8% VAT rate under Form 01 stipulated under Decree 15, to be submitted to the tax authorities together with the periodical VAT declaration. 

Deductibility for corporate income tax purposes of COVID-19-related donation and sponsorship expenses

Taxpayers are allowed to claim a corporate income tax deduction for donation and sponsorship expenses related to COVID-19 prevention in Vietnam for fiscal year 2022.

To claim such a deduction, taxpayers must maintain legitimate supporting documents as stipulated in Decree 15 and other relevant regulations.

Read a January 2022 report [PDF 107 KB] prepared by the KPMG member firm in Vietnam

 

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