Vietnam’s National Assembly Considers Further VAT Reduction Amid Economic Challenges

Hanoi, Vietnam - In the ongoing sixth session of the 15th National Assembly (NA) in Hanoi, held on November 20, lawmakers delved into discussions about a potential reduction in value-added tax (VAT). This deliberation comes after a series of reports presented to the assembly, including a summary report by Minister of Finance Ho Duc Phoc and an examination report by Chairman of the NA's Finance and Budget Committee, Le Quang Manh.

According to Vietnam News Agency, the NA had previously passed a resolution as part of the fiscal and monetary policies to aid the socio-economic recovery. This resolution included a 2% reduction in the VAT for certain goods and services, initially applied from February 1, 2022, to December 31, 2022. Given the ongoing economic challenges, the NA decided to extend this VAT reduction from July 1 to December 31, 2023.

Minister Phoc highlighted the significant impact of the VAT reduction policy from July to October, stating that it had provided support totaling around 15.6 trillion VND (approximately 650 million USD) for businesses and citizens. This measure has been instrumental in reducing the prices of goods and services, stimulating production and trade, generating more employment opportunities, and boosting consumer demand.

Looking ahead, the Government has proposed the continuation of various support measures related to taxes, fees, charges, and land rents for 2023, with considerations for similar support in 2024. Specifically, a proposal for a 2% VAT reduction for goods and services currently subjected to a 10% rate is on the table. This reduction, however, would exclude certain categories such as telecommunications, information technology, financial activities, banking, securities, insurance, real estate business, and products subject to special consumption tax. If approved, this reduction would be effective from January 1 to June 30, 2024.

In conclusion, Minister Phoc addressed various queries raised by the deputies. He emphasized that while reducing VAT is an effective short-term measure to stimulate the economy, it is equally important to implement long-term solutions to enhance GDP growth. The ongoing discussions and proposed measures reflect the government's commitment to navigating the economic challenges and fostering sustainable growth.