2% VAT reduction may continue into 1H 2024

The Ministry of Finance (MoF) has proposed that the Prime Minister continue to apply a 2 per cent reduction to the VAT rate in the first half of 2024, which has been implemented in 2022 and 2023 under National Assembly Resolutions No. 43/2022/QH15 and No. 101/2023/QH15.

The 2 per cent reduction is applicable to products and services subject to a 10 per cent rate, with exceptions on three groups of products and services: Group 1: telecommunications, financial activities, banking, securities, insurance, real estate business, metals and prefabricated products, mining products (excluding coal mining), coke coal, refined petroleum, and chemical products; Group 2: goods and services subject to special consumption taxes; and Group 3: information technology under information technology laws.

According to Document No. 10830/BTC-CST, dated October 6, from the MoF, the proposed reduction, if applied in the first half of 2024, would result in a deficit of an estimated VND25 trillion (over $1 billion) in the State budget.