Proposal to reduce 2% VAT on gasoline, washing machines, microwave ovens

The Ministry of Finance proposed expanding the 2% VAT reduction on gasoline, washing machines, and microwave ovens and extending this preferential policy until the end of 2026.

In the draft Resolution of the National Assembly on reducing value-added tax, the Ministry of Finance proposed extending the 2% reduction in value-added tax (VAT) for some goods and services by 18 months, instead of ending in June this year.

Thus, goods and services subject to a tax rate of 10% can be subject to a tax rate of 8% until the end of 2026. Similar to previous times, the sectors that will continue to not receive this tax reduction include real estate, securities, banking services, telecommunications, mining products (except coal), metals and groups of goods subject to special consumption tax.

The operator plans to expand the list of products eligible for a 2% VAT reduction, such as information technology products and services, washing machines, microwave ovens, and data processing services. This number also includes prefabricated metal products such as barrels, tanks, and metal containers, and boilers. Coal, gasoline, fertilizers, plastics, synthetic rubber in primary form, and imported coal... are also proposed for tax reduction.

According to the Ministry of Finance, gasoline and oil were previously not subject to the 2% VAT reduction, because gasoline is in the group of goods subject to special consumption tax, while oil is a mineral product. However, these are important goods that directly impact domestic production, consumption and macroeconomic stability, so the agency plans to add gasoline and oil to the group of goods eligible for tax reduction.

VAT is an indirect tax, levied on the final consumer. Unlike other taxes, VAT has the characteristic that the tax burden is shared between businesses and consumers, so when it is reduced, both parties benefit.

Therefore, according to the Ministry of Finance, when this tax is reduced, people and businesses will benefit, stimulate production and consumption, and generate revenue for the budget. The tax reduction will also contribute to creating a driving force, helping the economy achieve a growth rate of at least 8% this year and double digits in the coming period.

Extending this tax reduction period until the end of 2026 is expected to reduce budget revenue by about VND121,740 billion. Of which, the last 6 months of this year will reduce by about VND39,540 billion, and next year it will be VND82,200 billion.

Previously, from January 1, VAT has been reduced by 2% goods and services are subject to a 10% tax rate and will last until mid-year, according to the National Assembly's Resolution.

The VAT reduction policy has been implemented since 2022 to support people and businesses to recover from the Covid-19 pandemic. Over the past three years, the value of support from this policy has reached VND123,800 billion. In the first two months of this year alone, the VAT reduction is estimated at VND8,300 billion.

Source