Value Added Tax reduction and deductible expenses in relation to Covid-19 donations and sponsorship

On 28 January 2022, the Government issued Decree No. 15/2022/ND-CP providing guidance on tax reduction and exemption as part of the financial and monetary policies supporting the Program for Socio-Economic Recovery and Development provided under the Resolution No. 43/2022/QH15 issued by the  National Assembly on 11 January 2022.   

  

The following highlights are noteworthy:

From 1 February 2022 to 31 December 2022, VAT on goods and services subject to 10 percent VAT will be reduced by 2 percent to 8 percent, with the exception of the following groups of goods and services: 

For taxpayers who calculate and declare VAT as percentage on the total revenue, a 20 percent VAT reduction will be applied on the invoices which are issued for goods and services subject to VAT reduction.

  

Taxpayers are required to separately issue invoices for goods and services subject to VAT reduction. Otherwise, VAT reduction will not be allowed.

  

In case seller and buyer failed to outline the VAT reduction on an invoice which has already been declared, seller and buyer are allowed to make adjustment minutes/agreement in order to claim the reduction. According to the adjustment minutes/agreement, the seller may issue an adjusted invoice. Based on the adjusted invoice, seller and buyer will amend their VAT declaration accordingly.

  

Taxpayers will declare goods and services subject to VAT reduction on the Form 01 as per Annex IV of Decree No. 15/2022/ND-CP together with the routine VAT declaration forms.

  

Donations and sponsorship for preventive measures both, in cash and in kinds, which are made by taxpayers for Covid-19 for epidemic control operations in Vietnam are allowed to be included in deductible expenses when calculating Corporate Income Tax for the tax year 2022, if they are made through means specified in Clause 2 Article 2 of Decree No. 15/2022/ND-CP.

  

Required supporting documents include Minutes of confirmation of support or sponsorship made according to Form No. 02 in Appendix IV of Decree No. 15/2022/ND-CP, or documents (in paper or electronic form) confirming the support and sponsorship with the signature and seal of the representative of the sponsor and the means through which the sponsoring/donations are made; accompanied by legal invoices and documents as prescribed by law of donations or sponsorships in cash or in kind.