Why is the 2% VAT reduction only applicable until the end of June 2025?

At the press conference announcing the results of the 8th session of the 15th National Assembly, Mr. Vu Tuan Anh, Standing Member of the National Assembly's Finance and Budget Committee, explained the reason for only reducing VAT by 2% until the end of June 2025.

2 reasons not to extend the time

This afternoon (November 30), at the press conference announcing the results of the 8th session of the 15th National Assembly, a reporter from Giao Thong Newspaper asked: The National Assembly has decided to reduce value added tax (VAT) in the first 6 months of 2025. This is a decision that many businesses are waiting for to have more resources to recover and develop more sustainably.

But why doesn't the deadline apply to the whole year 2025 to really support businesses effectively both psychologically and in terms of resources?

"Along with that, the reduction of income tax for the press has received comments from some delegates suggesting that it should be reduced further to facilitate the operations of press agencies. How will the drafting and reviewing agencies accept this?", asked a reporter from Giao Thong Newspaper.

Mr. Vu Tuan Anh, Standing Member of the National Assembly's Finance and Budget Committee.

Responding to this content, Mr. Vu Tuan Anh, Standing Member of the National Assembly's Finance and Budget Committee, said that recently, the Government has repeatedly proposed a 2% reduction in VAT.

"This time, the reduction period will only be implemented for 6 months, because it is related to the local budget balance. When the Government submitted the budget estimate, it had already been approved by the National Assembly, so reducing taxes for the whole year will affect the balance," said Mr. Tuan Anh.

The second reason given by Mr. Vu Tuan Anh is the Law on Value Added Tax (amended), which has just been passed by the National Assembly and will take effect from July 1, 2025.

"Therefore, a 2% reduction until the end of June 2025 is appropriate. When the tax reduction resolution ends, the regulations of the newly passed Law will be switched to," said Mr. Vu Tuan Anh.

Regarding the reduction of income tax for the press, Mr. Tuan Anh said that recently, when amending the Law on Value Added Tax, the Government closely followed the tax reform strategy, reducing the number of non-taxable subjects, as well as the 5% tax rate, to move towards implementing a single tax rate.

Recently, the Government has evaluated many types of goods and services to adjust the non-taxable objects, as well as reduce the tax rate by 5%.

"Some National Assembly deputies suggested that tax rates should be reduced for the cultural sector, including the press. However, we also socialize many activities related to the cultural and press sectors.

Through review and consideration, it is seen that implementing the tax reform strategy will result in a common tax rate being applied in the future, with no more tax incentives.

International practice as well as international organizations have recommended to us many times that tax incentives do not ensure fairness. Therefore, support will not be provided through taxes," said Mr. Tuan Anh.

The Government has not yet submitted to the National Assembly a proposal to amend the family deduction level.

At the press conference, the press also reflected on the story of the family deduction level that has been mentioned many times, the Ministry of Finance also had information to collect opinions. However, it is expected that it will be approved by 2026 and implemented in 2027. Meanwhile, the current family deduction level is very outdated, affecting people's lives.

Overview of the press conference.

In response to this question, Mr. Vu Tuan Anh said that many delegates have expressed their opinions on amending the family deduction level. However, the Government has not submitted this content to the National Assembly Standing Committee for a long time.

In fact, compared to the previous adjustment, the family deduction level has changed a lot. During the working process with the drafting agency, the National Assembly agencies have given opinions to study the changes.

However, the Ministry of Finance has recently focused on fixing the areas that need to be resolved immediately. In amending the Law on Value Added Tax, the threshold for VAT has been adjusted from VND 100 million to VND 200 million. The amendment of the Law on Personal Income Tax will be synchronized to reduce the tax threshold for households and individuals doing business.

"Regarding family deductions, when amending the law, the adjustment levels will be presented. But according to authority, the Government has not yet submitted it to the National Assembly Standing Committee for consideration and adjustment," said Mr. Vu Tuan Anh.

The Ministry of Finance has just announced a draft proposal to the Government proposing the development of a draft Law on Personal Income Tax (replacement). In it, it proposes to change the family deduction level, taxable revenue for individuals, business households... before calculating personal income tax.

Regarding the family deduction level, the draft document acknowledges that the current level has been applied from 2020 to present, so it is necessary to review and re-evaluate to propose amendments and supplements suitable to new conditions.

Currently, the family deduction for personal income tax payers is 11 million VND/month, and for dependents is 4.4 million VND/month.

However, in addition to the too low deduction level, the current tax schedule is also considered unreasonable, with too many levels and the gap between levels being too narrow, easily leading to tax rate jumps.

Therefore, the Ministry of Finance proposes to reduce the tax rates from 7 levels (currently 5%, 10%, 15%, 20%, 25%, 30% and 35%) to an appropriate level; along with that, consider widening the income gap in tax levels, ensuring higher regulation for those with incomes in high tax levels.

Source: https://www.baogiaothong.vn/vi-sao-giam-2-thue-vat-chi-ap-dung-den-het-thang-6-2025-192241130180234169.htm