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Reducing VAT: consumers and enterprises benefit

13:44 | 10/03/2022

VCN – After more than a month since the application of Decree 15/2022/ND-CP of the Government on reducing value-added tax (VAT) from 10% to 8%, although there are still many problems, people and businesses have given positive feedback about this reduction.

After Decree 15 is officially applied, supermarkets have reduced the value-added tax of 2% on many goods items. Photo: Hương Giang
After Decree 15 is officially applied, supermarkets have reduced the value-added tax of 2% on many goods items. Photo: Hương Giang

Complying with the regulation

According to the Government's Decree No. 15/2022/ND-CP dated January 28, 2022, stipulating the tax exemption and reduction policy under the National Assembly's Resolution No. 43/2022/QH15, from February 1, 2022 to the end of December 31, 2022, 2% of VAT will be reduced for groups of goods and services that are currently subject to the 10% tax rate, except for some groups of goods and services.

With this policy, essential goods and services and many types of goods and services in the economy are reduced, and the VAT will be at 8%.

Thus, consumers can buy goods at a cheaper price, contributing to improving people's living standards and thereby stimulating consumption and production development.

According to a survey at a number of supermarkets and restaurants in Ho Chi Minh City, after Decree 15 officially took effect, most of the large retail enterprises have completed adjusting the items complying with the new prices thanks to the VAT reduction.

Specifically, the supermarket system of Saigon Co.op has begun to implement a VAT-based discounting schedule with more than 10,000 products. At the same time promoting and discounting a wide range of goods, especially vegetarian foods and merchandise to encourage consumption.

Similarly, GO!, Big C, Tops Market have also applied a new selling price to reduce VAT by 2% on 20,000 products, and launched more promotions with discounts of up to 49% for thousands of items such as fresh food, processed food, cosmetics, and an average discount of over 20% for 68 product lines such as cosmetics, flowers, cakes, teddy bears and gift boxes.

Moreover, food and beverage stores also strictly implement the reduction of VAT for a number of product items and services in accordance with regulations. At one store located on Dong Du, District 1, HCM City, cashiers separate items and services that are eligible for VAT reduction to calculate them separately for customers at the tax rate of 8%.

For people, the reduction of VAT (which is an indirect tax) has an indirect impact on consumption, leading to a decrease in the consumer price level in general. When the consumer price level decreases, people can save more from daily expenditures.

Thus, reducing VAT will support consumption, depending on the item being taxed it will have more or less impact, but in general, this support will encourage and promote the "demand" of people and make the demand for goods increase.

Tax reduction policy is small but effective

Mrs. Kim Dien, living in District 10, Ho Chi Minh City, said: "I have a newborn baby, so buying at supermarkets is always my choice because goods are plenty, neatly arranged, easy to find and especially the prices are always listed clearly. In particular, from the beginning of February, many items are eligible for VAT reduction, leading to a decrease in product prices. When the price drops, I'm always willing to buy in larger quantities, partly to support businesses in difficulty, and secondly to save costs."

Furthermore, Mrs. Tran Thuy, living in District 2, HCM City, said that she went to Mega market, Vinmart, and Coopmart supermarkets about 2-3 times a week. Those stores had applied VAT reduction by 2% on many items.

According to Thuy, although this was not a large amount of money, it also helped people save on spending. Although the price decreased, she still only bought essential items for her family, due to the impact of the pandemic on her income, she still could not spend as much as she did before the pandemic.

Regarding businesses, Mr. Nguyen Van Khang, General Director of Dong Thuan Construction Company, said: “Every year, the Corporation had to pay billions of VND in VAT, with the 2% VAT reduction policy, it had contributed to helping enterprises reduce difficulties, prioritize new sources of investment capital in key projects, bring more profits and maintain a stable source of revenue to pay taxes to the state budget.”

“The reduction of VAT was one of the macro policies of the State that was being applied to businesses. Although it was not much, it would be a driving force for businesses to nurture revenue and stimulate production development. Thus, consumers could buy goods at a cheaper price, helping to improve people's living standards and stimulate people's consumption," Mr. Bui Quang Phi, Director of Thanh Hien Hoa resort real estate company, said.

According to Mr. Phi, for businesses, with the VAT reduction, businesses will reduce input costs, make it more convenient for businesses to solve output problems and have more room for production.

In terms of economic problems, businesses will easily calculate outputs, which helps businesses feel secure to expand production and business.

Businesses and consumers believe that reducing VAT was a correct and timely policy, one of the measures to stimulate economic demand in the context of a decrease in the income of a part of the population and businesses facing difficulties due to a shortage of workers and supply chain disruptions due to the Covid-19 pandemic.

By Hương Giang/Thanh Thuy