HCMC – The Government’s proposal for lowering the value added tax (VAT) from 10% to 8% has been placed before the National Assembly (NA).
The minister of Finance, at the NA’s fifth sitting, sought approval for a VAT reduction to boost consumption and economic growth.
If the NA issues a new resolution approving the proposal, households and businesses would enjoy a two-percentage-point VAT cut from July 1 to December 31.
The VAT reduction should be similar to the NA’s Resolution 43/2022/QH15 issued last year and is expected to translate into a VND24 trillion in lost tax revenue, the minister said.
According to the Government, the total amount of VAT cut under the Government’s policy to prop up the post-pandemic economic recovery program last year was estimated at VND44.5 trillion.
Meanwhile, the tax reduction boosted consumption, leading to a 19.8% year-on-year increase in total revenue from retail and consumer services and a 10% year-on-year rise in VAT collection in 2022.
It added that a decrease in VAT would enable manufacturers to lower their production costs and product prices, facilitating business expansion, creating more jobs and benefiting residents due to lower prices.
The NA Finance and Budget Committee backed the proposal, saying this would bolster the manufacturing sector, businesses and households grappling with difficulties, the NA’s website quochoi.vn reported.
The committee suggested the NA review the impacts of the VAT cut on the 2023 budget collection.