VAT Reduction Eligibility: How to Issue Invoices?

The Legal Question:

Point b, Clause 3, Article 1 of the Government's Decree No. 174/2025/ND-CP dated June 30, 2025 stipulates that for business establishments paying VAT under the direct method, when issuing sales invoices for goods and services eligible for VAT reduction, the "Amount" column must reflect the full value of the goods and services before the reduction; the "Total Amount for Goods and Services" line must reflect the amount after a 20% reduction of the percentage rate on revenue; and concurrently, a note must be included regarding the tax reduction contents in accordance with Resolution No. 204/2025/QH15.

I would like to inquire: In case an enterprise signs a contract with an investor, and the contract or its appendix clearly states that the contract value is the value already reduced under Resolution No. 204/2025/QH15, is the enterprise permitted to directly write the reduced value in the "Amount" column and omit the tax reduction note when issuing the invoice, despite the guidance in Decree No. 174/2025/ND-CP?

Furthermore, in this scenario, which value should the enterprise use to declare revenue for tax calculation purposes: the post-reduction value as per the signed contract, or must it convert it back to the pre-reduction value to declare revenue in compliance with regulations?

Answer (H2)

Tax Sub-department 1 of Son La Province responds to this matter as follows:

Pursuant to Point b Clause 2, Point b Clause 3, and Clause 4, Article 1 of the Government's Decree No. 174/2025/ND-CP dated June 30, 2025, which regulates the VAT reduction policy under the National Assembly's Resolution No. 204/2025/QH15 dated June 17, 2025:

"Article 1. Value-added tax reduction

2. VAT reduction rate: … b) Business establishments (including business households and individual entrepreneurs) calculating value-added tax using the percentage-on-revenue method shall be granted a 20% reduction in the percentage rate used to calculate value-added tax when issuing invoices for eligible goods and services specified in Clause 1 of this Article.

3. Order and procedures for implementation: … b) For the business establishments specified in Point b, Clause 2 of this Article, when issuing sales invoices for goods or services eligible for value-added tax reduction, the full value of goods or services before reduction must be written in the "Amount" column, the amount written in the "Total Amount for Goods and Services" line must reflect the 20% reduction of the percentage rate on revenue, and a note must simultaneously be included: "reduced by... (amount), equivalent to 20% of the percentage rate for value-added tax calculation under Resolution No. 204/2025/QH15."

4. In case a business establishment specified in Point b, Clause 2 of this Article sells goods or provides services, the sales invoice must clearly state the reduced amount as prescribed in Clause 3 of this Article...".

Based on the aforementioned regulations, for business establishments calculating tax under the direct method (calculating VAT using the percentage-on-revenue method), when selling goods or providing services, the sales invoice must explicitly state the reduced amount as regulated.

Tax Sub-department 1 of Son La Province provides this answer for taxpayers' awareness and implementation.

Source: chinhsachonline.chinphu.vn