Proposal to further reduce VAT by 2%, Deputy Prime Minister said 'sad to have to discuss tax reduction'

Deputy Prime Minister Ho Duc Phoc – Photo: Quochoi.vn

According to the Deputy Prime Minister, from 2020 to 2023, there have been many policies to reduce taxes, fees, charges and land rents to help support people and businesses. However, there are still many challenges and risks affecting the growth target of 6.5 - 7%, the rate of businesses withdrawing from the market tends to be high...

This reality poses many challenges to the 2025 growth target as well as significantly impacts the operations of businesses and people. Therefore, it is necessary to have policies to promote growth and continue tax policies, including reducing VAT by 2%.

Proposal to continue reducing VAT for 6 months

Accordingly, this resolution applies a 2% reduction in VAT for goods and services currently subject to a VAT rate of 10%. Except for some groups of goods and services.

Including telecommunications, information technology, financial activities, banking, securities, insurance, real estate business, metals, prefabricated metal products, mining products (excluding coal mining), coke, refined petroleum, chemical products, goods and services subject to special consumption tax in the first 6 months of 2025.

The proposed tax reduction is applied from January 1, 2025 to June 30, 2025. According to calculations, the expected reduction in state budget revenue in the first 6 months of 2025 is equivalent to about 26,100 billion VND.

According to the Government, the implementation of this tax policy aims to stimulate consumption, in line with the current economic context, thereby contributing to promoting the recovery and growth of production and business activities to contribute back to the budget as well as the economy.

The 2% reduction in VAT will affect the prices of goods and services, thus benefiting people, while businesses will reduce costs, lower product prices, and increase competitiveness and consumption of goods.

Examining this content, Chairman of the National Assembly 's Finance and Budget Committee Le Quang Manh agreed with the necessity of issuing the decree, but some opinions disagreed, saying that this policy was issued in 2022 and should only be considered a temporary solution for a certain period of time to support people and businesses.

Not to mention, the expected reduction in budget revenue of about VND 26,100 billion from this policy, which has not been taken into account in the 2025 budget estimate, may affect the assurance of revenue estimates and budget deficit.

Although there is a basic consensus to apply this policy until June 2025, there are opinions that the implementation of the tax reduction policy is relatively short-term. This partly reflects the quality of forecasting and the vision of the policy proposal, affecting the initiative of businesses...

Worrying about VAT reduction every 6 months

To move towards stability and predictability of the value-added tax policy system and synchronously implement the amended Law on Value-Added Tax, it is recommended that the Government ensure the deadline for the termination of the tax reduction policy as presented at this session, and not continue to propose an extension.

Speaking at the meeting, delegate Pham Van Hoa (Dong Thap delegation) agreed with the 2% VAT reduction, but he said that it should not be "reduced piecemeal" every 6 months. Because last year, when the Government proposed a 6-month VAT reduction, there were opinions asking why not ask for a 1-year reduction.

“Does the Government guarantee that after 6 months it will not submit to the National Assembly a further 2% VAT reduction? I suggest the Government review so that it does not have to submit multiple times. At the same time, it is necessary to review why some businesses are eligible for a reduction and others are not to ensure fairness,” said Mr. Hoa.

Explaining further, Deputy Prime Minister Ho Duc Phoc expressed that he had not yet had time to “assess the impact” when drafting this resolution. However, the expected tax reduction will help stimulate consumption and increase production, thereby helping GDP increase and tax revenue increase.

Compared to other countries, Mr. Phuc said that our VAT rate is lower. For example, China and India, Israel 17%, Europe more than 20%, Denmark, Norway 25%, France 20%... Although Vietnam's VAT rate is lower, because 2025 has not yet fully anticipated difficulties, especially in exports, it is necessary to apply this policy.

“We are also sad to have to discuss the tax reduction situation. The most important thing is how to make businesses stronger and richer, we do not have to borrow from foreign countries anymore, this is the goal. Solving difficulties for businesses does not only rely on taxes, but also on policies, investment procedures, and obstacles,” Mr. Phoc expressed.

Source: https://tuoitre.vn/de-xuat-giam-tiep-2-thue-vat-pho-thu-tuong-noi-buon-vi-phai-ban-ve-giam-thue-20241128163605785.htm