The Government submitted to the National Assembly permission to reduce 2% value added tax in the first 6 months of 2024

In 2022, the National Assembly issued Resolution No. 43/2022/QH15 dated January 11, 2022 on fiscal and monetary policies to support the Socio-Economic Recovery and Development Program, which proposed a solution to reduce VAT by 2% for a number of groups of goods and services subject to a VAT rate of 10% from February 1, 2022 to December 31, 2022.

In 2023, facing economic difficulties, the National Assembly will continue to implement the VAT reduction policy according to Resolution No. 43/2022/QH15 from July 1, 2023 to December 31, 2023 in Resolution No. 101/2023/QH15 dated June 24, 2023 of the National Assembly on the 5th Session, 15th National Assembly.

The solution 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.

Minister of Finance Ho Duc Phoc said that after 4 months of implementation (July, August, September and October 2023), the VAT reduction policy under Resolution No. 101/2023/QH15 has supported businesses and people with a total of about 15.6 trillion VND, contributing to reducing the cost of goods and services, thereby promoting production and business and creating more jobs for workers, contributing to stimulating consumption and promoting production and business.

In order to promptly respond to developments in the socio-economic situation, and at the same time consider and calculate appropriately with actual conditions, the Minister of Finance proposed to resolutely and effectively implement support solutions on taxes, fees, charges and land rents issued in 2023 and study and propose a number of solutions to reduce taxes, fees and charges for 2024 such as: Continuing to consider reducing VAT by 2% and considering reducing environmental protection tax rates on gasoline and oil as applied in 2023; continuing to review and reduce export tax and import tax rates to support domestic production and business; reducing the collection of a number of fees and charges.

Regarding the content of the VAT reduction policy, Minister of Finance Ho Duc Phoc stated that, based on the report assessing the implementation of the 2% VAT rate reduction policy according to Resolution No. 43/2022/QH15 and Resolution No. 101/2023/QH15, which has been stably implemented in 2022 and 2023; the State budget revenue in 2024 is expected to face many difficulties, the Government proposes to continue implementing the 2% VAT rate reduction policy as the content of the VAT reduction policy approved by the National Assembly in Resolution No. 43/2022/QH15 and Resolution No. 101/2023/QH15.

Specifically: Reduce 2% VAT rate for groups of goods and services currently subject to a tax 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; application period from January 1, 2024 to June 30, 2024.

Regarding the impact assessment, the Minister of Finance said that the expected reduction in state budget revenue is about 4,175 trillion VND/month, if applied in the first 6 months of 2024, it is equivalent to 25 trillion VND.

Reducing VAT will contribute to reducing costs and selling prices of goods and services, thereby contributing to promoting production and business and maintaining jobs for workers, contributing to stabilizing the macro economy and economic recovery in 2024.

For the people, this is the group that will directly benefit from this policy. Reducing VAT on goods and services subject to a VAT rate of 10% will contribute to reducing selling prices, thereby directly reducing people's costs in consuming goods and services serving people's lives.

For businesses, a 2% reduction in VAT will help reduce production costs and product prices, thereby helping businesses increase their competitiveness, increase consumption of goods and services, and expand production and business.

During the discussion session, 5 delegates spoke, and Minister of Finance Ho Duc Phoc spoke to explain and clarify issues of concern to National Assembly delegates.

Concluding the session, Vice Chairman of the National Assembly Nguyen Duc Hai assessed: Through discussion, National Assembly deputies agreed on the need to reduce value added tax to stimulate consumption, promote production and business, economic growth, and create more jobs for workers.

However, some delegates suggested further clarifying the need to issue policies, more carefully assessing the ability to achieve the goal of stimulating consumption, and assessing the basis for calculating and forecasting long-term budget and macroeconomic impacts.

Delegates agreed on the scope, tax reduction subjects, policy application period, and enforcement effect, but some delegates also proposed to expand the policy to apply to all groups of goods and services currently subject to a tax rate of 10%. Some suggested applying the policy for the entire year of 2024.

Previously, in the morning session of November 20, the National Assembly discussed in the hall the results of monitoring the settlement of voters' petitions sent to the 5th Session of the 15th National Assembly. Government members and relevant agencies and individuals explained and clarified a number of issues raised by National Assembly deputies.

On the same afternoon, the National Assembly also discussed in the hall the draft Resolution on applying additional corporate income tax according to regulations against global tax base erosion.