The Government submitted to the National Assembly a proposal to extend the 2% reduction in value-added tax (VAT) on some goods for another 6 months, until mid-2024.
Authorized by the Prime Minister, Minister of Justice Le Thanh Long has just signed the Government's report to the National Assembly and the National Assembly Standing Committee on extending the 2% VAT reduction period until the end of June 2024.
According to the Government, reducing VAT and other tax and fee solutions create conditions for businesses to reduce production costs, increase profits, and contribute to economic growth.
Therefore, to promptly respond to developments in the socio-economic situation, the Government believes that it is necessary to continue applying tax, fee and charge support in the first half of next year.
The extension of the 2% VAT reduction until the end of June 2024, according to the Government, will only apply to a number of groups of goods and services currently subject to a 10% tax rate. That is, sectors such as banking, securities, real estate, alcoholic beverages, etc. will not be eligible for this tax reduction.
The Government proposes that the National Assembly and the National Assembly Standing Committee add this draft Resolution to the 2023 law and ordinance making program according to the shortened procedures and order and pass it at the ongoing 6th session.
VAT has been reduced by 2% since July 1 for goods and services currently subject to a tax rate of 10% and will last until the end of 2023, according to the National Assembly Resolution. Unlike other taxes, VAT has the important characteristic that the tax burden is shared between businesses and consumers, so when reduced, both of these subjects will benefit.
At the socio-economic discussion session on November 2, some delegates also proposed extending the 2% VAT reduction period for all goods. Mr. Tran Hoang Ngan said that this would be a solution to stimulate domestic consumption in the context of weak aggregate demand and unrecovered import and export. This tax reduction for all goods would be more effective than excluding the real estate, banking, securities sectors... as it is now.
However, when explaining, Minister Ho Duc Phoc said "if the reduction is too much, it will put pressure on the budget". Regarding the 2024 budget revenue estimate, Mr. Phoc said it is also based on the exclusion of two items: a 50% reduction in environmental protection tax on gasoline and jet fuel and an extension of the 2% reduction in VAT on some groups of goods and services until the middle of next year.
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