Supporting businesses and stimulating the economy

Continuing to reduce taxes by 2% will help promote investment, remove difficulties for businesses, and help production and business recover soon.

Cong Thuong Newspaper had an interview with economic expert, Dr. Nguyen Minh Phong to better understand this issue.

Sir, 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, specifically proposing a 2% reduction in VAT rates, applicable to groups of goods and services currently subject to a 10% tax rate (to 8%)... So, how do you evaluate the results of this policy with its implementation over the past 3 years?

Economist Nguyen Minh Phong - Photo: Quoc Chuyen

Value Added Tax (VAT) is an indirect tax levied on the final consumer and charged at each stage of the production, supply and consumption chain. The total tax payable at each stage in the economic chain is a fixed rate for the value added by the business stage to the product. Exports are usually exempt from VAT or, alternatively, VAT is refunded to the exporter. Businesses can be refunded VAT on raw materials and services they purchase to create further products or services for direct or indirect sale to end users.

In Vietnam, the most common VAT rate for goods is 10%. That is, a common item that a business buys to sell is already subject to 10% VAT, but there are also special types of goods that are only subject to a tax rate of 5%, or even 0%.

During the 2022-2024 period, the National Assembly has resolved to reduce the VAT rate by 2% 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 results show that in 2022, the implementation of the value-added tax reduction policy according to Resolution No. 43/2022/QH15 will support businesses and people with a total of about 51.4 trillion VND, 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% VAT reduction under Resolution No. 101/2023/QH15 in the last 6 months of 2023 will support businesses and people with a total of about 23.4 trillion VND. In 2023, total retail sales of goods and consumer service revenue increased by 9.6% compared to 2022. In 2024, the VAT reduction under Resolution No. 110/2023/QH15 and Resolution No. 142/2024/QH15 is estimated at about 49 trillion VND.

Accordingly, in the 2022-2024 period, the total value of support from the 2% VAT reduction policy will amount to VND 123.8 trillion, contributing to reducing costs for businesses engaged in production and trading of goods and services eligible for VAT reduction.

Thus, it can be seen that the Resolution is aimed at stimulating 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.

What do you think about the proposal to continue reducing taxes by 2% in the first 6 months of 2025, especially in stimulating production and business enterprises as well as creating momentum for economic growth?

According to the Report on the implementation of the 2024 Socio-Economic Development Plan, the Government's projected Socio-Economic Development Plan for 2025, and the Statistical Report on the Socio-Economic Situation from 2022-2023 and the first 10 months of 2024 of the Ministry of Planning and Investment, many positive points were shown, with continuous improvement in total retail sales of goods and consumer service revenue; stability of the consumer price index (CPI); increase in total export and import turnover of goods and total state budget revenue.

The 2% tax reduction will help promote production and business activities to recover and develop soon to contribute back to the budget as well as the economy - Photo: Mocchaumilk

Accordingly, it can be assessed that the 2% VAT reduction policy has contributed to reducing costs through businesses with production and trading activities of goods and services receiving VAT reduction, leading to a reduction in the selling price of goods and services for consumers, thereby promoting business production and business, people's consumption, contributing to creating more jobs for workers and achieving the set goal when building the VAT reduction policy, which is to stimulate consumption and promote production and business development.

In short, the 2% reduction in VAT is and will help businesses and people benefit and the economy has more motivation to recover, demonstrating the most practical, direct and effective support and sharing of the state; at the same time, it requires the Ministry of Finance and relevant agencies to continue to reform and modernize the tax system, simplify tax administrative procedures, strengthen the effective implementation of tax laws and state budget revenue management, combat revenue loss, transfer pricing, tax evasion... to compensate for the shortfall in state budget revenue due to tax reduction.

So, in your opinion, what additional solutions are needed to support businesses, people and the economy to continue to maintain the recovery and growth momentum, especially next year?

In addition to positive factors, there are still many challenges and risks that may affect the implementation of the economic growth target for 2025 (the plan is 6.5-7%). However, in my opinion, the economic growth target for the whole country in 2025, which has just been approved by the National Assembly, is basically reasonable and even quite cautious, has many bases and is highly feasible in the assumption that the world context does not have many major breakthroughs...

In addition to the solution of reducing VAT by 2% to help reduce costs and selling prices of goods and services for consumers, thereby promoting business production and business, people's consumption, creating more jobs for workers and achieving the set goals when building a VAT reduction policy to stimulate consumption, promote production and business development... the Government needs to continue to consistently implement the solutions that have been and are being implemented for 2023-2024, especially extending the deadline for tax and land rent payment; reducing land rent; reducing environmental protection tax on gasoline and oil products...

At the same time, promote the effective implementation of Resolution No. 218/NQ-CP dated November 12, 2024 of the Government on the regular Government meeting in October 2024; continue substantive administrative reform, minimize opportunity costs for people and businesses; improve responsibility, capacity and effectiveness, efficiency in performing public duties of civil servants, especially for leaders...

In particular, it is necessary to closely monitor the world situation, respond appropriately with policies, prioritize growth, promote production and business, study to reduce lending interest rates, issue bonds to implement strategic infrastructure projects, exempt and reduce taxes, fees, charges... for businesses, manage exchange rates appropriately, control inflation well, ensure food and energy supply, diversify markets, products, supply chains, develop capital markets, build financial centers... In addition, continue to restructure the economy towards rapid and sustainable growth.

Source: https://congthuong.vn/tiep-tuc-de-xuat-giam-2-thue-tro-luc-tiep-suc-cho-doanh-nghiep-kich-cau-nen-kinh-te-359748.html