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Friday, June 14, 2024

Government proposes extending VAT reduction policy to mid-2024

The Saigon Times

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HCMC – The Government has submitted a proposal to extend the two-percentage-point reduction of the value-added tax (VAT) for certain goods and services until mid-2024.

If approved, this extension is expected to provide the VAT of 8%, instead of 10%, to businesses, ultimately lowering production costs, boosting profitability and contributing to economic growth.

The proposed extension will only apply to the categories of goods and services currently subject to the 10% VAT.

Sectors such as banking, securities, real estate, and alcoholic beverages will continue to be excluded from this VAT reduction.

To expedite the extension process, the Government has recommended adding this resolution to the legislative agenda for 2023, streamlining the review process during the ongoing sixth session.

The existing VAT reduction, which took effect on July 1, 2023, was originally set to expire at the end of the year.

Despite some lawmakers advocating for extending the VAT reduction to cover all goods and services, Finance Minister Ho Duc Phoc has expressed concerns about the potential strain on the nation’s budget revenue.

He emphasized that budget projections for 2024 depend on maintaining the 50% reduction in environmental protection tax for gasoline and jet fuel, in addition to extending the VAT cut for specific goods and services until mid-2024.

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