On November 19, the Ministry of Finance said that it is sending a dispatch to ask for opinions from relevant ministries and branches on the proposal to continue reducing value-added tax (VAT) by 2% in the first 6 months of 2025.
Extend VAT reduction period to stimulate consumption
The Ministry of Finance said that in the 2022 - 2024 period, the National Assembly has resolved to reduce the VAT rate by 2% for groups of goods and services currently subject to a VAT rate of 10% (to 8%) along with other support solutions on taxes, fees, and charges, which has created great conditions to help businesses reduce production costs, increase profits, and increase the ability to stimulate demand.
The results show that in 2022, the implementation of the VAT reduction policy according to Resolution No. 43/2022/QH15 has supported businesses and people with a total of about 51.4 trillion VND, thereby contributing to stimulating increased domestic consumption, with total retail sales of goods and consumer service revenue in 2022 increasing by 19.8% compared to 2021.
In 2023, the 2% VAT reduction under Resolution No. 101/2023/QH15 in the last 6 months of 2023 has supported businesses and people with a total of about 23.4 trillion VND. In general, in 2023, total retail sales of goods and consumer service revenue increased by 9.6% compared to 2022.
In 2024, the amount of VAT reduced according to Resolution No. 110/2023/QH15 and Resolution No. 142/2024/QH15 is estimated at about 49 trillion VND.
According to information on recent socio-economic developments in the Report on the implementation of the 2024 Socio-Economic Development Plan, the Government's expected 2025 Socio-Economic Development Plan and the Ministry of Planning and Investment's 10-month Socio-Economic Statistical Report in 2024, many positive results have been shown.
The socio-economic situation is more positive in the following month than the previous month, the following quarter is higher than the previous quarter, the first 9 months achieved many important results, higher than the same period in most areas. GDP growth in the first 9 months reached 6.82%; the whole year is estimated to reach 6.8 - 7%, higher than the target assigned by the National Assembly (6 - 6.5%), belonging to the group of countries with high growth rates in the region and the world, highly appreciated by many large and prestigious international organizations.
In the first 10 months of 2024, total retail sales of goods and consumer service revenue are estimated at VND 5,246.2 trillion, up 8.5% over the same period last year; Consumer Price Index (CPI) increased by 3.78% over the same period last year; core inflation increased by 2.69%.
Total preliminary import and export turnover of goods reached 647.87 billion USD, up 15.8% over the same period last year, of which exports increased by 14.9%; imports increased by 16.8%. The trade balance of goods had a surplus of 23.31 billion USD. Total budget revenue reached 1,654.2 trillion VND, equal to 97.2% of the annual estimate and up 17.3% over the same period last year.
Businesses are encouraged to produce
In order to promote production and business activities to recover and develop soon to contribute back to the state budget as well as the economy, the Ministry of Finance proposed to reduce the VAT rate by 2% in the first 6 months of 2025, applied to groups of goods and services currently applying a tax rate of 10% (to 8%), except for some groups of goods and services: Telecommunications, information technology, financial activities, banking, securities, insurance, real estate business, metals, prefabricated metal products, mining products (excluding coal mining), coke, refined petroleum, chemical products, goods and services subject to special consumption tax.
The 2% VAT reduction policy has contributed to reducing costs through businesses that produce and trade goods and services that are entitled to a VAT reduction, leading to a reduction in the selling price of goods and services for consumers, thereby promoting business production and business of businesses, people's consumption, contributing to creating more jobs for workers and achieving the set goal when building the VAT reduction policy, which is to stimulate consumption and promote production and business development.
The current VAT Law stipulates two VAT rates of 5% and 10% (excluding the 0% rate applicable to exported goods and services; subjects not subject to VAT). For goods and services subject to 5% VAT, the output VAT is basically less than the input VAT, so businesses usually do not incur any VAT payable.
For goods and services subject to 10% VAT, VAT payable will arise (output VAT is greater than input VAT). Therefore, tax reduction for these subjects is necessary.
The subjects of the VAT reduction policy are organizations and individuals producing and importing goods and providing services subject to VAT. Tax authorities, state agencies, other relevant organizations and individuals.
