MOF PROPOSES 2 PER CENT VAT REDUCTION UNTIL MID-2024

The Ministry of Finance (MoF) has recommended reducing VAT by 2 per cent for the first six months of 2024 on some groups of goods and services that are currently subject to the 10 per cent rate.

The MoF is collecting feedback from ministries, the Vietnam Chamber of Commerce and Industry, and municipal and provincial people's committees on the 2 per cent VAT reduction policy that could be applied in 2024.

The MoF said that it will study and propose a number of solutions to reduce taxes, fees, and charges next year. The potential 2 per cent VAT reduction is expected to support businesses and the community.

Specifically, goods and services that are currently subject to 10 per cent VAT would be entitled to a reduced rate of 8 per cent, with the following exceptions; telecommunications, IT services, finance and banking services, securities, insurance, real estate business, metal production and the manufacture of prefabricated metal products, the mining industry (excluding coal mining), the production of coke (a coal-based fuel), refined petroleum, the production of chemicals and chemical products, and goods and services that are subject to special sales taxes.

If approved, the VAT rate reduction will take effect from January 1, 2024 to June 30, 2024, with the government predicted to see a budget revenue reduction of VND25 trillion (just over $1 billion) during the period.

Between July and September this year, the 2 per cent VAT reduction policy has supported businesses and consumers with a total sum of about VND11.7 trillion ($493.7 million). While reducing the prices of many goods and services, the policy also facilitates production and creates more jobs, stimulating consumer demand.

In 2022, the support package for VAT reduction amounted to VND44 trillion ($1.86 billion), providing necessary relief during difficult times.

Source: VIR