Proposal to reduce value added tax by 2% until June 30, 2025

The Ministry of Finance is seeking comments on the draft Decree regulating the policy of reducing value-added tax according to the Resolution dated November 30, 2024 of the National Assembly.

According to the Ministry of Finance, the issuance of the Decree aims to stimulate consumption, in line with the current economic context, thereby promoting production and business activities to recover and develop soon to contribute back to the state budget as well as the economy to implement the 5-year socio-economic development plan 2021 - 2025, the annual socio-economic development plan, and the economic restructuring plan for the period 2021 - 2025.

The draft Decree clearly states: Reduce value added tax on groups of goods and services currently subject to a tax rate of 10%, except for the following groups of goods and services:

a) Telecommunications, financial activities, banking, securities, insurance, real estate business, metals and prefabricated metal products, mining products (excluding coal mining), coke, refined petroleum, chemical products. Details are in Appendix 1 issued with this Decree.

b) Goods and services subject to special consumption tax. Details are in Appendix II issued with this Decree.

c) Information technology according to the law on information technology. Details are in Appendix III issued with this Decree.

d) Value added tax reduction for each type of goods and services is applied uniformly at the stages of import, production, processing, and commercial business. For coal products sold (including coal mined and then screened and classified according to a closed process before being sold) are subject to value added tax reduction. Coal products listed in Appendix I issued with this Decree, at stages other than mining and selling, are not subject to value added tax reduction.

Corporations and economic groups that implement a closed process to sell are also subject to value-added tax reduction on coal products sold.

In case the goods and services listed in Appendices I, II and III issued with this Decree are not subject to value added tax or are subject to 5% value added tax according to the provisions of the Law on Value Added Tax, the provisions of the Law on Value Added Tax shall apply and no value added tax reduction shall be allowed.

According to the draft, business establishments calculating value added tax by the deduction method shall apply a value added tax rate of 8% to the goods and services specified above.

Business establishments (including business households and individual businesses) calculating value added tax according to the percentage method on revenue are entitled to a 20% reduction in the percentage rate for calculating value added tax when issuing invoices for goods and services eligible for value added tax reduction as prescribed above.

This Decree takes effect from January 1, 2025 to June 30, 2025.

Ministries, according to their functions and tasks, and the People's Committees of provinces and centrally run cities shall direct relevant agencies to disseminate, guide, inspect and supervise so that consumers understand and benefit from the reduction of value-added tax stipulated in this Decree, focusing on solutions to stabilize supply and demand of goods and services subject to value-added tax reduction in order to stabilize market prices (prices excluding value-added tax) from January 1, 2025 to June 30, 2025.

The Ministry of Finance said that the implementation of the 2% VAT reduction policy according to the National Assembly's Resolution is expected to reduce state budget revenue in the first 6 months of 2025 by about VND 26.1 trillion (about VND 4.35 trillion/month, of which the domestic reduction is about VND 2.85 trillion/month and the import reduction is about VND 1.5 trillion/month).

Reducing VAT reduces state budget revenue but also stimulates production and promotes business activities, thereby contributing to creating more revenue for the state budget.

Please read the full draft and give your comments here.

Source: https://thoibaonganhang.vn/de-xuat-giam-thue-gia-tri-gia-tang-2-den-3062025-158429.html