Proposal to continue reducing VAT by 2% in the last 6 months of 2024

VCN - The Government has just submitted a proposal to the National Assembly to consider and allow the continued implementation of the policy of reducing Value Added Tax (VAT) by 2% for a number of groups of goods and services that are currently subject to a VAT rate of 10% in the last 6 months of 2024 (from July 1, 2024 to December 31, 2024). According to the Government's calculations, applying the policy of reducing the VAT rate by 2% for the last 6 months of 2024 reduces revenue by about 24 trillion VND.
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Proposal to continue reducing VAT by 2% in the last  6 months of 2024
n the first 3 months of 2024, the amount of VAT reduced according to Resolution No. 110/2023/QH15 is about 11,488 trillion VND. Photo: H.Anh

Under the authorization of the Prime Minister, Minister of Finance Ho Duc Phoc has just submitted Report No. 177/TTr-CP to the National Assembly on the results of implementing the 2% VAT reduction according to Resolution No. 110/2023/QH15 November 29, 2023 of the National Assembly.

Citing information in the Statistical Report on the socio-economic situation in the first 3 months of 2024 of the Ministry of Planning and Investment, the Government's report stated that the socio-economic developments in recent times have had many positive points, however, after enduring the Covid-19 epidemic for a long time, domestic enterprises are in the process of recovery, so production and business activities are still facing difficulties.

The number of businesses withdrawing from the market reached 73.9 thousand, an increase of 22.8% over the same period last year. If compared with the number of enterprises registering for new establishment and returning to operation with the number of enterprises withdrawing from the market in the first quarter of 2024, it decreased by 14.1 thousand, an average decrease of 4.7 thousand enterprises/month.

At the 6th session, the National Assembly passed Resolution No. 103/2023/QH15 on the Socio-Economic Development Plan for 2024, with the goal of a GDP growth rate of 6 - 6.5 %. Global financial and economic organizations have recently simultaneously made optimistic comments about Vietnam's economic prospects in 2024 compared to other countries in the region, but these forecasts are lower than the assigned target by the National Assembly.

In the coming time, the world and regional situation will continue to evolve rapidly, complexly and difficult to predict; The recovery of major trading partners is still slow due to the risk of disruption to the supply chain and global value chain, etc. Domestically, although many industries and fields continue their recovery trend and have positive prospects; Many policies and solutions to remove difficulties and obstacles have been effective, but the difficulties and challenges outweigh the opportunities and advantages. Aggregate domestic consumption demand is considered an important driving force to promote economic growth. Therefore, the Government believes that it is necessary to continue to have financial policy solutions to promote aggregate domestic consumption demand.

In order to promptly respond to developments in the socio-economic situation, and simultaneously consider and calculate in accordance with actual conditions, the Government believes that it is necessary to drastically and effectively deploy solutions to support taxes, fees, charges and land rent issued in 2023.

At the same time, research and propose a number of solutions on taxes, fees, charges and land rent for 2024, such as continuing to consider reducing VAT by 2%; extend VAT, Corporate Income Tax, Special Consumption Tax, Personal Income Tax; Reduce the collection of some fees and charges and reduce land rent as applied in 2023 to continue to remove difficulties and support production and business activities.

Based on the assessment of the results achieved by the 2% VAT reduction solution according to Resolution No. 110/2023/QH15, the Government submits to the National Assembly for consideration and permission to continue implementing the 2% VAT reduction policy for Some groups of goods and services are applying a 10% VAT rate in the last 6 months of 2024 (from July 1, 2024 to December 31, 2024) and assign the Government to organize and implement.

According to the Government's calculations, applying the policy of reducing the VAT rate by 2% for the last 6 months of 2024 will reduce revenue by about 24 trillion VND (about 4 trillion VND/month, of which a decrease in the domestic stage is expected to be 2.5 trillion VND/month and a decrease in import of about 1.5 trillion VND/month).

In the first 3 months of 2024, the amount of VAT reduced according to Resolution No. 110/2023/QH15 is about 11,488 trillion VND. Except for February, which has the Tet holiday, in January and March, the average VAT reduction at the import stage is about 1.5 trillion VND/month and is expected to be about 2.5 trillion VND/month at the domestic stage.

Thus, in the first 6 months of 2024, revenue is expected to decrease by about 23,488 trillion VND. If we continue to implement the VAT reduction policy for the last 6 months of the year, it is expected that the whole year of 2024 will reduce revenue by about 47.488 trillion VND.

Regarding implementation, the Government submitted to the National Assembly the content to continue implementing the policy of reducing 2% VAT for groups of goods and services specified in Point a, Section 1.1, Clause 1, Article 3 of Resolution No. 43. /2022/QH15 of the National Assembly on fiscal and monetary policies to support the socio-economic recovery and development program during the period from July 1, 2024 to December 31, 2024 in the Resolution of the National Assembly on the 7th Session, 15th National Assembly (similar to what was passed by the National Assembly in Resolution No. 101/2023/QH15 on the 5th Session and Resolution No. 110/2023/QH15 on the 6th Session ).

By Huong Diu/Phuong Linh

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