Petroleum is among the goods eligible for VAT reduction for the first time
At the 9th Session, the Minister of Finance - authorized by the Prime Minister - submitted to the National Assembly a draft Resolution on reducing value-added tax (VAT). A notable new point is the proposal to reduce VAT on gasoline from 10% to 8%, applied in the period from July 1, 2025 to December 31, 2026.
If approved, this will be the first time that gasoline - which is subject to special consumption tax - will be included in the group of goods with reduced VAT.
According to the draft, gasoline is classified as a special exception, meaning it is still subject to special consumption tax but still eligible for a 2% VAT reduction, while other special consumption goods such as beer, wine, luxury cars... are not entitled to this policy.
How will tax reduction be applied?
The draft clearly states two methods of applying the tax reduction policy:
For enterprises applying the VAT deduction method: the tax rate is reduced from 10% to 8%.
For households and individuals doing business who apply the method of calculating the percentage on revenue: receive a 20% reduction in the percentage to calculate tax.
The VAT reduction policy was temporarily implemented in 2022-2024 to support economic recovery, but has never been applied to gasoline. The expansion of the scope of application this time is expected to have a direct impact on the retail price of this essential item.
Many groups of goods and services are still excluded
According to the draft, some goods and services continue not to be subject to VAT reduction, including: alcohol, beer, cigarettes, cars with less than 24 seats, motorbikes over 125cm3, airplanes, yachts, cards, votive paper, massage services, karaoke, casino, games with prizes, betting, golf courses, lottery...
This group is mostly luxury goods or entertainment services, which have been excluded from the support in previous VAT cuts.
Currently, the proposal to reduce VAT on new gasoline is in the process of collecting opinions and submitting to the National Assembly for discussion. Although not yet issued, if approved, it could create significant downward pressure on domestic retail gasoline prices, especially in the context of many fluctuations in world prices.
Follow the developments of gasoline prices HERE.
