Reducing VAT along with tax and fee supports helps stimulate demand, reduce costs, and increase profits

	VAT proposed to reduce in the first half of 2024
	MoF to propose to extend policies to support people and private sector: Minister of Fiance Ho Duc Phoc
	Reducing VAT is a multi-target policy with a positive impact on the economy

Under the authorization of the Prime Minister, the Minister of Finance presented the Government's proposal on VAT reduction. Photo: Quochoi.vn

Expected reduction in state budget revenue is about 25 trillion VND

According to the Minister of Finance, the Covid-19 pandemic has caused severe and lasting consequences, affecting all aspects of life, economy and society, along with climate change, natural disasters, storms and floods which has caused our country's economy and society to face many great difficulties and challenges, with most industries and fields being seriously affected.

Therefore, the focus on drastic and synchronous implementation of financial policy solutions in recent times has had a positive impact in supporting businesses and people to stabilize production, business, people's lives are returning to normal, contributing to macroeconomic stability and creating favorable conditions to promote economic recovery and growth.

The Minister said that in 2022, the National Assembly issued Resolution No. 43/2022/QH15 dated January 11, 2022 on fiscal and monetary policies to support the socio-economic recovery and development program, which has proposed a solution to reduce VAT by 2% for a number of groups of goods and services subject to the 10% VAT rate from February 1, 2022 to December 31, 2022.

To promptly respond to developments in the socio-economic situation, and at the same time consider and calculate in accordance with actual conditions, Minister of Finance Ho Duc Phoc proposed the need to drastically and effectively deploy support solutions for taxes, fees, charges and land rent which have been issued in 2023, research and propose a number of solutions to reduce taxes, fees and charges for 2024.

Specifically: continue to consider reducing VAT by 2% and consider reducing the environmental protection tax on gasoline and oil as applied in 2023; Continue to review and reduce export and import tax rates to support domestic production and business; Reduce the collection of some fees and charges.

In 2023, facing the difficulties of the economy, the National Assembly continues to implement the VAT reduction policy according to Resolution No. 43/2022/QH15 from July 1, 2023 to December 31, 2023 in Resolution No. 01/2023/QH15 dated June 24, 2023 of the National Assembly on the 5th Session, 15th National Assembly. The solution to reduce VAT along with other support solutions for taxes, fees, and charges are creating great conditions to help businesses reduce production costs, increase profits, and increase the ability to stimulate demand.

After 4 months of implementation (July, August, September, October 2023), the VAT reduction policy has supported businesses and people with a total of about 15.6 trillion VND, contributing to reducing the cost of goods, services, thereby promoting production and business and creating more jobs for workers, contributing to stimulating consumer demand and promoting production and business development.

Regarding the content of the VAT reduction policy, Minister of Finance Ho Duc Phoc stated clearly, based on the report evaluating the implementation of the policy of reducing the VAT rate by 2% according to Resolution No. 43/2022/QH15 and Resolution No. 101/2023/QH15 which has been implemented stably in 2022 and 2023; Expected state budget revenue in 2024 will still face many difficulties, the Government proposes to continue implementing the policy of reducing the VAT rate by 2% as the content of the VAT reduction policy approved by the National Assembly in Resolution No. 43/2022 /QH15 and Resolution No. 101/2023/QH15.

Specifically, reduce the VAT rate by 2% for groups of goods and services currently applying the tax rate of 10% (to 8%), except for some of the following 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, petroleum refining, chemical products, goods and services subject to special consumption tax; The application period is from January 1, 2024 to June 30, 2024.

Calculating the impact, Minister of Finance Ho Duc Phoc said that the expected monthly reduction in state budget revenue is about 4.175 trillion VND, so if applied in the first 6 months of 2024, it will be equivalent to a reduction in state budget revenue of about 25 trillion VND.

“Reducing VAT will contribute to reducing costs and selling prices of goods and services, thereby contributing to promoting production and business and maintaining jobs for workers, contributing to macroeconomic stability and economic recovery in 2024", the Minister of Finance emphasized.

According to the Government's assessment, people will directly benefit from this policy, tax reduction contributes to directly reducing people's costs in consuming goods and services to serve people's lives.

For businesses, a 2% reduction in VAT will contribute to reducing production costs and product prices, thereby helping businesses' products increase competitiveness and increase consumption of goods and services, expand production and business.

The Finance and Budget Committee agreed with the need to promulgate a VAT reduction policy. Photo: Quochoi.vn

Evaluate and consider the impact on state budget revenue

Examining the Government's submission, Chairman of the National Assembly's Finance and Budget Committee Le Quang Manh said that the Committee agreed with the need to promulgate policies to accompany the Government in implementation solutions of socio-economic development plan for 2024.

But there are still some opinions that do not agree with continuing to promulgate the VAT reduction policy in 2024 because they believe that the VAT reduction policy is only a temporary measure to cope with difficulties at this time. The economy suffers many negative impacts due to the complicated developments of the epidemic; Up to now, the pandemic has passed, the economy in 2022 achieved very positive results with a growth rate of 8.02%.

There are some opinions in the Finance and Budget Committee that, while the results of demand stimulation are unclear, the reduction in revenue has a negative impact on local budget balances, which is a reality; There are also opinions that suggest that the Government carefully consider continuing the tax exemption and reduction policies implemented in recent times, when state budget collection tasks have become increasingly difficult in recent years.

Regarding the content of the policy, Chairman of the Finance and Budget Committee Le Quang Manh said that some opinions suggest considering expanding the scope of eligible subjects for VAT reduction in the direction of applying a tax rate of 8% for all groups of goods and services which are applying a tax rate of 10%.

Regarding the time to apply the policy, the majority of opinions in the Finance and Budget Committee agreed on the time to apply the VAT reduction policy as drafted to suit the balancing ability of the state budget in the current context.