Smartphones, imported cars, cigars are not eligible for VAT reduction

The General Department of Customs has just sent an express dispatch to customs departments guiding the implementation of Decree 44/2023/ND-CP stipulating the value-added tax (VAT) reduction policy.

The General Department of Customs requires customs departments to disseminate the content of the decree to all customs officers, declarants and businesses in the locality under their management.

The General Department of Customs requires customs units to note a number of contents related to the VAT reduction policy. Specifically, the reduction of 2% VAT for groups of goods currently applied at the tax rate of 10% (to 8%), except for some of the following groups of goods: telecommunications, information technology, metals, and products from prefabricated metals, mining products (excluding coal mining), coke, refined petroleum, chemical products, products and goods subject to excise tax.

Items not eligible for VAT reduction are specified in Appendix 1, 2 and 3 issued with Decree 44. As noted, a number of imported items in this list include: Cars below 24 seats, two-wheeled motorcycles, three-wheeled motorcycles with a cylinder capacity of over 125 cm3; computers, smartphones, cigarettes, cigars…

For the list of goods not eligible for VAT reduction, the General Department of Customs notes that the list of imports with HS codes in column 10, Appendix 1, column 10, part a and column 4, part b, Appendix 3 is only used for search. The determination of HS codes for actually imported goods is still done according to the Customs Law and guiding documents.

Lines marked with (*) in column 10, Appendix 1, column 10, part a, and column 4, part b, Appendix 3 of the Decree are allowed to declare HS codes according to the actual imported goods.

The General Department of Customs requires customs departments to guide businesses and customs declarants to declare on the automatic clearance system and the National Single Window, choose the correct tax reduction list code (VB205) to declare. VAT 8%.

This code does not apply to cases that are not subject to VAT, subject to VAT but apply the tax rates of 0%, 5% and 10% according to the provisions of the Law on Value Added Tax.

The General Department of Customs emphasized that the reduction of VAT from 10% to 8% only applies to customs declarations registered from 0:00 on July 1. In case the customs declaration is registered before this time, 8% VAT will not be applied.