Proposal to continue reducing VAT by 2% from July 1, 2025 to December 31, 2026

According to the draft, VAT will be reduced from 10% to 8% for groups of goods and services currently subject to a tax rate of 10%, except for groups such as: telecommunications, finance, banking, securities, insurance, real estate, metals, mining (except coal), goods and services subject to special consumption tax (except gasoline).

Compared to previous resolutions, this proposal has a new point in expanding the scope of tax reduction, including a number of groups of goods and services (a number of information technology products such as washing machines, microwave ovens, etc.; prefabricated metal products (barrels, tanks, storage equipment, etc.); coke, refined petroleum, chemical products; gasoline of all kinds are important inputs for production and life) also subject to a 2% VAT reduction.

According to the Ministry of Finance, the 2% VAT reduction policy is not only aimed at supporting businesses in reducing costs, but also has a greater indirect impact: helping to reduce goods prices, thereby stimulating consumption, increasing aggregate demand, promoting production and business, creating jobs and income for workers.

The draft clearly states: in the context of limited fiscal and monetary policy space, continuing the tax support policy is a necessary solution to help achieve the GDP growth target of 8% or more in 2025 and stabilize the macro economy.

The Ministry of Finance also expects that reducing VAT by 2% in the last 6 months of 2025 and the whole year of 2026 will reduce state budget revenue by about VND 121,740 billion (of which VND 39,540 billion in 2025 and VND 82,200 billion in 2026).

However, the Ministry of Finance believes that this reduction in revenue is acceptable in the context of needing to support growth. On the other hand, the spillover effect of the policy will help increase revenue indirectly through expanded production, increased consumption and improved investment.

To make up for the shortfall, the Ministry will implement solutions to strictly manage revenue and expenditure, save the budget, expand the application of digital technology and artificial intelligence in tax management, promote electronic invoices and limit revenue loss.

The Ministry of Finance also affirmed that this VAT reduction policy does not contradict Vietnam's international commitments, nor does it conflict with the Law on Value Added Tax or current legal documents. This is a temporary support measure, approved by the National Assembly through a separate resolution, similar to the policies applied from 2022 to present.

In the 2022-2024 period, the 2% VAT reduction policy has been assessed to have a positive effect in supporting economic recovery and maintaining growth momentum after the COVID-19 pandemic.

The Ministry of Finance is currently seeking comments from ministries, branches, and localities and publicly publishing the draft on the Electronic Information Portal for public comments. It is expected that the Ministry will complete the dossier and submit it to the National Assembly at the 9th session (May 2025) under the simplified procedure, in order to implement the policy from July 1, 2025.

The Ministry of Finance assessed that continuing to reduce VAT is a timely and practical support measure for consumers, businesses and the economy in general, in the context of the world economy still facing many uncertainties, inflation tending to increase, and pressure on exchange rates, interest rates and high energy prices.

This is also one of the flexible fiscal solutions, contributing to maintaining macroeconomic stability, supporting growth in the medium term, and creating momentum for comprehensive tax reform after 2026.

Thanh Ha

Source: https://baophapluat.vn/de-xuat-tiep-tuc-giam-2-thue-vat-tu-0172025-den-31122026-post543326.html