Lawmakers consider proposed resolution for decreasing VAT by 2%
Vietnam's Finance Minister delivers remarks as lawmakers discuss a 2% VAT reduction policy to boost economic recovery during the 15th National Assembly's 9th session in Ha Noi.
The proposed resolution aims to reduce the Value-Added Tax (VAT) from 10% to 8% on most goods and services subject to the 10% VAT rate, with certain exceptions such as telecommunications, financial services, and real estate. The policy is expected to take effect from July 1, 2025, and run until December 31, 2026.
The objectives of this tax relief policy include lowering production costs, stimulating consumer spending, and promoting economic activities, with the ultimate goal of contributing to Vietnam's socio-economic development goals, including achieving a GDP growth rate of 8% or more in 2025 and paving the way for double-digit growth during 2026–2030.
While discussing the draft resolution, legislators also addressed other matters, including amendments to the Law on Planning and the Law on Energy Efficiency and Conservation, as well as a resolution amending articles of the Regulation of the NA session.
The reviewing body requested the Government assess the fiscal balance capacity when implementing this resolution, taking into account the budgetary impacts of other revenue-reduction policies and newly arising expenditures from now until the end of the year. These evaluations should be reflected in the 2025 fiscal report and serve as a basis for drafting the 2026 budget plan, with the Government responsible for managing revenue tasks and ensuring the 2025 state budget remains balanced within the deficit limit approved by the National Assembly.
Finance Minister Nguyễn Văn Thắng delivers remarks at the session. - VNA/VNS Photo
The Ministry of Finance estimates the tax cut will result in a loss of approximately 121.74 trillion VND (around $4.8 billion USD) in state revenue. However, it is anticipated that the reduction will support consumer spending, lower living and consumption costs, improve business competitiveness, and expand markets. The proposal has received strong support from National Assembly deputies and is under consideration for approval.
- The government is expected to evaluate the fiscal balance capacity while implementing the VAT reduction policy, considering other revenue-reduction policies and new expenditures.
- The 2025 fiscal report will reflect these evaluations, serving as a basis for drafting the 2026 budget plan.
- The Ministry of Finance anticipates a loss of around $4.8 billion USD in state revenue due to the tax cut.
- The policy aims to lower production costs, stimulate consumer spending, promote economic activities, and contribute to Vietnam's socio-economic development goals.
- The proposed VAT reduction policy has received strong support from National Assembly deputies and is under consideration for approval.
- Exceptions to the VAT reduction policy include telecommunications, financial services, real estate, and other industries yet to be defined, potentially impacting business competitiveness in these sectors.
