On November 28, during the 8th session, the Deputy Prime Minister and Minister of Finance, Ho Duc Phoc, on behalf of the Prime Minister, presented the National Assembly with a draft resolution on reducing the value-added tax (VAT) rate.
Deputy Prime Minister and Minister of Finance Ho Duc Phoc presents the proposal. Photo: Ho Long
Accordingly, the government proposes to reduce the VAT rate by 2%, applicable to goods and services currently subject to a 10% rate (down to 8%), except for the following: telecommunications, information technology, financial activities, banking, securities, insurance, real estate business, metals, metal products, mining products (excluding coal mining), coke, refined petroleum products, chemical products, and special consumption tax goods and services. This policy will be effective from January 1, 2025, to June 30, 2025.
The 2% VAT reduction policy has been implemented in recent years due to the negative impact of the COVID-19 pandemic. The government assesses that the 2% VAT reduction policy has contributed to reducing costs for businesses and, consequently, product prices for consumers.
The tax cut promotes business production and development, encourages consumer spending, helps create more jobs for workers, and achieves the intended goals when the VAT reduction policy was first implemented.
Deputy Prime Minister Ho Duc Phoc emphasized that continuing the VAT reduction in the first half of 2025 will stimulate consumer demand, suit the current economic context, and promote business production and development. This will contribute to the state budget and the economy to achieve socio-economic development plans.
With the 2% VAT reduction, the state budget is expected to decrease by approximately VND 26.1 trillion in the first six months of 2025. “The VAT reduction will lead to a decrease in state budget revenue, but it will also stimulate production and business activities, thereby contributing to additional revenue,” Deputy Prime Minister Ho Duc Phoc stated.
Chairman of the Finance and Budget Committee, Le Quang Manh, presents the verification report. Photo: Ho Long
Presenting the verification report, Le Quang Manh, Chairman of the National Assembly’s Finance and Budget Committee, stated that most of the committee members agreed on the necessity to issue a resolution to continue applying the VAT reduction policy. This will help reduce production costs and selling prices, stimulate consumer demand, maintain jobs for workers, and support people and businesses in maintaining their recovery momentum. It will also contribute to the state budget and the economy.
On the other hand, some disagreed with the continued application of the VAT reduction policy, arguing that it was a temporary solution implemented in 2022 when businesses and people faced difficulties due to the COVID-19 pandemic.
Now that the pandemic has been over for a long time, tax incentive policies introduced to support businesses and individuals in overcoming post-pandemic challenges need to be reconsidered to narrow down their scope gradually. Therefore, the proposal to continue issuing and implementing the VAT reduction policy is deemed inappropriate.
Regarding the duration of the policy, most members of the Finance and Budget Committee agreed with the government’s proposal to apply the policy from January 1, 2025, to June 30, 2025. Additionally, some members suggested applying the policy for the entire year of 2025 to ensure sufficient time to support production and business activities and avoid requesting policy extensions.
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