Further VAT reduction is necessary

The Ministry of Finance is proposing to draft a National Assembly Resolution on reducing value-added tax (VAT) in the first 6 months of 2025 to support businesses and people and continue to stimulate the economy. The estimated reduction in state budget revenue when implementing this policy is about 25 trillion VND...

According to the Ministry of Finance, this proposal aims to stimulate consumer demand, in line with the current economic context, thereby promoting production and business development to contribute back to the state budget as well as the economy.

In the 2022-2024 period, the National Assembly has resolved to reduce the VAT rate by 2 percentage points for groups of goods and services currently subject to a VAT rate of 10% (to 8%), except for the following groups of goods and services: 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. The application period is from January 1, 2025 to June 30, 2025.

The estimated reduction in state budget revenue in the first 6 months of 2025 is about 25 trillion VND, equivalent to 4,175 trillion VND/month. Of which, the reduction in domestic revenue is expected to be 2.5 trillion VND/month and the reduction in import revenue is about 1.5 trillion VND/month.

According to the Ministry of Finance, in addition to positive factors, in the coming time there will be many challenges and risks that may affect the implementation of the economic growth target for 2025 (the plan is 6.5-7%).

At present, the rate of enterprises withdrawing from the market remains high; consumption and public investment disbursement have not been as expected; production input factors face many barriers and difficulties in transforming the growth model; innovation in the business environment and institutional reform, although achieving some progress, are still slow, posing many potential risks in investment and business of enterprises and people...

The above difficulties pose many challenges to the 2025 growth target as well as significantly impact production and business activities. Therefore, there is a need for additional solutions to support businesses, people and the economy to continue to maintain the momentum of recovery and growth.

People and businesses are very excited about the VAT reduction policy.

Accordingly, continuing to reduce VAT along with other support solutions on taxes, fees, and charges is creating great conditions to help businesses reduce production costs, increase profits, and increase the ability to stimulate demand.

In 2024 alone, the amount of VAT reduced according to Resolution No. 110/2023/QH15 and Resolution No. 142/2024/QH15 is estimated at about 49 trillion VND.

The Government's Reports on the Implementation of the 2024 Socio-Economic Development Plan, the 2025 Socio-Economic Development Plan, and the Ministry of Planning and Investment's Statistical Report on the Socio-Economic Situation in the First 10 Months of 2024 show many positive points. The socio-economic situation is more positive each month than the previous month, and each quarter is higher than the previous quarter; the first 9 months achieved many important results, higher than the same period in most areas.

However, Deputy Secretary General of the Vietnam Federation of Commerce and Industry (VCCI) Dau Tuan Anh said that currently private investment is still quite small, so tax and fee reductions should continue as a solution to support the recovery of the private economic sector.

Sharing the same view, Dr. To Hoai Nam - Permanent Vice President and General Secretary of the Vietnam Association of Small and Medium Enterprises said that tax extension and reduction policies have been and are being absorbed into businesses, supporting businesses to overcome cash flow difficulties due to temporary tax exemption. At this time, businesses are still facing many difficulties and challenges, so the business community really needs the Government's support, extending support policies, including VAT reduction policies.

According to Mr. Mac Quoc Anh - Vice President of the Hanoi Association of Small and Medium Enterprises, the recent 2 percentage point reduction in VAT is considered a triple arrow, contributing to reducing the cost of goods and services, promoting production and business and creating more jobs for workers, and contributing to stimulating consumer demand and promoting production and business development.

Source: https://thoibaonganhang.vn/tiep-tuc-giam-thue-vat-la-can-thiet-158037.html