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Tuesday, June 25, 2024

Government greenlights VAT cut extension into H1 next year

The Saigon Times

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HCMC – Deputy Prime Minister Le Minh Khai has endorsed the Ministry of Finance’s proposal to extend a two-percentage-point reduction in value-added tax (VAT) until the first half of next year but it needs approval from the National Assembly.

In Official Dispatch No. 7866 issued by the Government Office on October 17 regarding the VAT reduction proposal, the Ministry of Finance is tasked with finalizing the proposal for submission to the National Assembly for approval.

Previously, the ministry presented the proposal to the prime minister for an extension of the VAT cut from January 1, 2024 to June 30, 2024.

The two-percentage-point VAT reduction will apply to types of goods and services currently subject to a VAT rate of 10%. However, it will not be applied to goods and services in sectors such as telecommunications, information technology, finance and banking, securities, insurance, real estate, metal production, oil refining, mining, chemical production, and goods and services subject to excise tax.

The VAT cut is expected to reduce state budget revenue by VND25 trillion.

In 2022, the National Assembly issued Resolution 43 on fiscal and monetary policies to support the Socio-Economic Development and Recovery Program, outlining measures to lower VAT from 10% to 8% for several types of goods and services, effective from February 1, 2022 to December 31, 2022.

Given local and global economic uncertainties, the National Assembly reinstated the VAT cut, with effect from July 1, 2023 to December 31, 2023.

Within three months, from July 2023 to September 2023, businesses and residents received support totaling VND11,700 billion thanks to the two-percentage-point VAT cut.

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