Hanoi, June, 29, 2024 – In a significant move to bolster economic recovery, the National Assembly of Vietnam has approved a resolution to reduce the value-added tax (VAT) from 10% to 8% until December 31, 2024. This policy aims to continue the economic relief efforts initiated last year, providing much-needed support to businesses and consumers alike.
Background and Extension of the VAT Reduction
The VAT reduction policy initially took effect from February 2022 to December 31, 2022, following a resolution passed by the National Assembly. Recognizing the ongoing economic challenges, the National Assembly approved the VAT reduction from July 1, 2023, and last until 30 June 2024. Recently, the National Assembly has just approved on extending this policy through the end of 2024.
Scope of the VAT Reduction
The VAT reduction applies broadly across most categories of products and services. However, there are notable exclusions, including:
- Telecommunications
- Information technology
- Financial activities
- Banking
- Securities
- Insurance
- Real estate business
- Metal and production
- Prefabricated metal products
- Mining products (excluding coal mining)
- Refined petroleum
- Chemical products
- Goods and services subject to special consumption tax
- Information technology
The Ministry of Finance has projected a significant impact on state budget revenue due to this policy, estimating a reduction of approximately VND 24 trillion in the last half of 2024 alone. Despite this, the government believes that the long-term economic benefits will outweigh the short-term revenue loss.
The VAT reduction is part of a broader strategy to stimulate the national economy. By lowering the VAT rate, the government aims to increase consumer spending and support businesses in recovering from the financial strains of the past few years.
Conclusion
The extension of the VAT reduction policy until the end of 2024 reflects the National Assembly's proactive approach to sustaining economic recovery and providing continuous support to the business community. By alleviating some of the tax burdens, the government is fostering a more favorable environment for growth and stability.
For more information on how this policy may affect your business, contact us via the form below or at info@fidinam.com.vn.
