Continued 2% VAT reduction suggested

The Ministry of Finance (MoF) is seeking public comments on a draft resolution proposing a 2% reduction in value-added tax (VAT) to stimulate consumption, support businesses and promote economic growth, according to a report from the Vietnam News Agency (VNA).

The proposal suggests extending the 2% VAT reduction from July 1, 2025, until the end of 2026.

As VET has reported, under resolutions adopted by the National Assembly, 2% VAT reduction has been applied to goods and services originally taxed at 10% since 2022 until June 30, 2025, with exception of key sectors such as telecommunications, finance, banking, securities, insurance, real estate, metal products and mining (except coal).

Goods and services subject to special consumption tax, except gasoline, are also not subject to VAT reduction.

VNA further reported that the MoF’s draft expands the list of eligible items for VAT reduction, including washing machines, microwaves, data processing services and prefabricated metal products including barrels, tanks and boilers. Additionally, gasoline and oil are proposed to receive tax cuts due to their critical role in production, consumption and overall macroeconomic stability.

According to the MoF, reducing VAT will lower the cost of goods and services, boosting production, business expansion and help job creation. The policy is also expected to benefit consumers directly by reducing the cost of essential goods and services, thereby improving living standards.

The MoF forecasts that the proposed VAT reduction will lead to a decrease in State budget revenue of more than VND121.74 trillion ($4.8 billion).

The ministry added that the VAT reduction policy, implemented since 2022 to aid post-pandemic recovery, has provided support worth VND123.8 trillion (more than $4.8 billion) over the past three years.