2% VAT reduction extends to end of 2026

The National Assembly on June 17 approved a resolution to cut 2% of the Value-Added Tax (VAT) for goods and services currently taxed at 10% from July 1, 2025 to December 31, 2026.

The VAT reduction will not apply to sectors including telecommunications, financial services, banking, insurance, securities, real estate, metal products, mining (excluding coal) and items subject to special consumption tax (except for gasoline).

The 2% reduction in VAT has been introduced since 2022 to aid economic growth following the COVID-19 pandemic.

The Government reported that the VAT reduction may lead to decreases of some VND39.54 trillion ($1.517 billion) in state budget revenue during the second half of 2025, and about VND82.2 trillion ($3.087 billion) in 2026.