VAT reduction: Stimulate and support business production

The Resolution of the 8th Session of the 15th National Assembly, which was just passed by the National Assembly on the afternoon of November 30, allowed a further reduction of 2% in the value-added tax (VAT) rate for groups of goods and services specified in Resolution No. 43/2022/QH15 from January 1, 2025 to June 30, 2025.

People shop at Big C Thang Long supermarket. Photo: Tran Viet/VNA

According to economic experts, reducing VAT from 10% to 8% is meaningful and has an impact on most people and businesses. Because when taxes are reduced, the prices of goods and services will decrease, thereby helping to stimulate consumer demand and businesses to restore production.

Value added tax is an indirect tax, included in the selling price of products, goods and services. In the context of many economic difficulties, experts believe that continuing to extend the period of value added tax reduction along with other tax, fee and charge solutions is creating great conditions to help businesses reduce production costs, increase profits and increase the ability to stimulate demand.

Economist Dinh Trong Thinh commented: Reducing VAT is one of the important measures to help businesses overcome some of the fluctuations in import prices from abroad. Reducing VAT will contribute to reducing the cost of goods and services, thereby promoting production and business and creating more jobs for workers, contributing to stabilizing the macro economy and economic growth in 2025.

Speaking to the press, Associate Professor Dr. Ly Phuong Duyen - Faculty of Taxation and Customs (Academy of Finance) said that the 2% VAT reduction in the first 6 months of 2025 is suitable for the current economic context. From there, it is a great driving force to promote enterprises to develop production and business, contribute back to the state budget, as well as continue economic growth in the first months of 2025.

According to Associate Professor Dr. Ly Phuong Duyen, the reduction of VAT also helps reduce the selling price of goods and services by 2% compared to applying a tax rate of 10%. Thereby, promoting business production and business, people's consumption, contributing to creating more jobs for workers and achieving the set goal of both stimulating consumption and promoting production and business development.

Ms. TAV, director of a consumer goods company in Hanoi, excitedly said: With the continued application of the 2% VAT reduction policy, many products will be cheaper than before, helping the company reduce part of the selling price and stimulate consumer purchases in the current difficult economic conditions.

"Extending the VAT reduction in the first half of 2025 will not only ease the hardship for people but also benefit businesses as purchasing power improves...", Ms. TAV said.

Ms. Nguyen Thi Thuy (Hanoi) - a housewife said: In the context of high prices of many essential goods and services such as tuition fees, daily necessities, while the income of many salaried workers like her has decreased sharply, the 2% reduction in VAT seems small but in reality it adds up to a large amount of money.

The Ministry of Finance said that the VAT reduction is expected to reduce state budget revenue in the first 6 months of 2025 by about 26.1 trillion VND.

2025 is the fourth year that the National Assembly and the Government have decided to reduce VAT to support the economy and increase consumer demand. The Ministry of Finance believes that reducing VAT will reduce state budget revenue but also stimulate production and promote production and business activities. This will also contribute to creating additional revenue for the state budget.

According to the Ministry of Finance, in 2022, the implementation of the VAT reduction policy will support businesses and people with a total of about VND 51.4 trillion, contributing to stimulating increased domestic consumption, with total retail sales of goods and consumer service revenue in 2022 increasing by 19.8% compared to 2021.

In 2023, the 2% reduction in value-added tax in the last 6 months of the year supported businesses and people with a total of about 23.4 trillion VND, total retail sales of goods and consumer service revenue increased by 9.6% compared to 2022.

In 2024, the value added tax reduction is estimated at about 49 trillion VND.

Source