stimulating consumption, boosting production
According to the draft resolution, the Ministry of Finance proposes to reduce VAT by 2% from July 1, 2025 to December 31, 2026 for groups of goods and services currently subject to a tax rate of 10%
The Ministry of Finance also proposed expanding the range of products and services to receive a 2% VAT reduction. Including information technology products and services (laws, microwaves, data processing services, leasing and related activities, information portals, etc.); chemical products such as fertilizers and allocates of oxygen, plastic and synthetic rubber in the form of raw materials, etc.; coal at the import and sale stages of commercial business; gasoline, oil, etc.
According to the Ministry of Finance, the VAT reduction policy in recent years has clearly promoted the effectiveness of supporting people and businesses and stimulating domestic consumption.
In 2024, the support level from the tax reduction policy is estimated at about VND49,000 billion, helping the total retail sales of goods and consumer service revenue increase by 9.0% compared to 2023. Entering 2025, in the first 2 months of the year, the amount of VAT reduced is estimated at VND 8,300 billion. Total retail sales of goods and consumer service revenue reached about VND 1,137.5 trillion, up 9.4% over the same period.
Assessing the impact of the policy, Deputy Minister of Finance Cao Anh Tuan said: The 2% VAT reduction policy has contributed to reducing costs through businesses with production and business activities of goods and services being reduced in VAT, leading to reduced sales prices of goods and services to consumers. Thereby promoting business production and consumption of people, contributing to creating more jobs for workers and achieving the goal set when building a VAT reduction policy of stimulating consumption and promoting production and business development".
Helping reduce commodity prices, people reduce pressure
According to Mr. Nguyen Quang Huy - CEO of the Faculty of Finance - Banking (Nguyen Trai University): "Continuing to maintain VAT at 8% is a flexible and practical fiscal solution in the context of weak purchasing power and unstable economic recovery. When people's disposable income has not increased sharply, while the cost of healthcare, education, food and housing is still high, reducing VAT will directly help lower the price of goods and services - thereby reducing daily spending pressure for tens of millions of people".
He said that this is not only a short-term measure to support consumption, but also a "medicine" affecting market expectations.
Mr. Huy commented that "The practical implementation of the VAT reduction policy from 10% to 8% in the period of 2022-2024 shows double effectiveness. For consumers, prices of essential goods and services have decreased by about 1.5-2%, helping to increase access, especially for middle- and low-income people. For businesses, lower tax rates create room for selling prices to decrease, increase competitiveness, expand the market and maintain jobs, especially in pressured areas such as retail, tourism, restaurants - hotels".
From practice and the above analysis, Mr. Huy suggested extending the VAT policy to 8% at the same time, needing to combine VAT reduction with other fiscal and credit policies such as: increasing public spending efficiency, supporting interest rates for small and medium-sized enterprises, reforming tax refund procedures and promoting digital transformation in tax management. This will help turn tax policies from short-term tools into leverage to stimulate long-term and systematic economic growth.
