Economic - Market News March 25, 2025: Proposal to reduce VAT by 2% until the end of 2026

Proposal to reduce VAT by 2% until the end of 2026

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If the Ministry of Finance 's proposal is approved, the 2% VAT reduction will continue to be extended from July 1, 2025 to December 31, 2026.

The Ministry of Finance is seeking comments on the draft Resolution of the National Assembly on reducing value-added tax (VAT).

According to the draft, the value added tax rate will be reduced by 2%, applied to groups of goods and services currently subject to a tax rate of 10% (to 8%), except for the following groups of goods and services: Telecommunications, financial activities, banking, securities, insurance, real estate business, metal products, mining products (except coal), goods and services subject to special consumption tax (except gasoline).

The period of application of the 2% value added tax reduction prescribed above is from July 1, 2025 to December 31, 2026.

In early January 2025, the Government issued Decree No. 180 stipulating the VAT reduction policy according to Resolution No. 174 of the National Assembly. Decree 180 takes effect from January 1 to June 30, 2025. Accordingly, the VAT rate will continue to be reduced by 2% for a number of groups of goods and services from January 1, 2025 to June 30, 2025; except for some fields such as telecommunications, information technology, finance - banking, insurance, real estate, metals, mining (except coal), refined petroleum, chemicals and products subject to special consumption tax... In 2024, the Government has reduced VAT in 2 phases (from January 1, 2024 to June 30, 2024 and from July 1, 2024 to December 31, 2024).

Assessing the impact of the draft Resolution on the proposed tax reduction this time, the Ministry of Finance said that the expected reduction in state budget revenue in the last 6 months of 2025 and the whole year of 2026 is equivalent to about 121,740 billion VND. Of which, the last 6 months of 2025 will decrease by about 39,540 billion VND, in 2026 it will decrease by about 82,200 billion VND).

Reducing VAT reduces state budget revenue but also stimulates production and promotes business activities, thereby contributing to creating more revenue for the budget.

According to the Ministry of Finance, a 2% reduction in VAT will contribute to reducing the cost of goods and services, thereby promoting production and business and creating more jobs for workers, contributing to stabilizing the macro economy and economic growth in the last 6 months of 2025.

For the people, who will directly benefit from this policy, the 2% reduction in VAT will directly contribute to reducing people's costs in consuming goods and services serving people's lives.

As for businesses, the 2% reduction in VAT will help reduce production costs and lower product prices through businesses that produce and trade goods and provide services that are eligible for VAT reduction. This will help reduce the selling price of goods and services for consumers, help businesses increase their competitiveness, increase consumption of goods and services, and expand production and business, contributing to creating more jobs for workers.

63% of Vietnamese people tend to tighten spending

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Many people are also getting used to taking advantage of promotions and discount codes on e-commerce platforms, or changing small daily habits.

According to a report by PwC Vietnam, 63% of Vietnamese respondents are tending to tighten their spending, prioritizing essential goods, while also reducing spending on luxury products, services, and entertainment. In fact, the consumer price index increased by 0.34% last month, which gives families many different ways to spend more reasonably.

According to PwC Vietnam, 33% of users said they cut spending on luxury products, services, entertainment...

Ms. Pham Thi Ngoc Hoa - Senior Manager, Strategy and Operations Consulting Services, PwC Vietnam said: "We see that rising prices as well as the ability to ensure spending are the biggest concerns of Vietnamese consumers in the coming period. Although the Vietnamese economy has begun to recover, we see that rising prices, specifically for essential goods such as beverages, energy as well as health spending items, are the biggest risks that Vietnamese consumers are worried about in the next 12 months. People may cut or reduce spending or they will wait for periods when there are promotional discounts to be able to shop for items at more reasonable costs".

According to surveys of platforms, users are becoming more flexible in adjusting spending categories. Many people are also starting to get used to taking advantage of promotions and discount codes on e-commerce platforms, or changing small daily habits, such as spending on food and travel.

OCOP products consumed are not proportional to the quantity

To date, the country has more than 14,600 OCOP products. Illustrative photo

The OCOP program - One Commune One Product was implemented with the expectation of creating a driving force to promote the rural economy and increase people's income. Up to now, after nearly 6 years of implementation, the program has been creating strong impressions nationwide with more than 14,600 products. The number of star-rated products is increasing, but the consumption market has not increased proportionally.

At a supermarket in Dak Lak, the OCOP booth is located right next to the cashier counter - a prime location in the supermarket for nearly 5 years. The products are full of honey, coffee, macadamia to herbal tea, dried fruit... but the number of customers is quite sparse.

Or most of Vietnam's cocoa is mainly exported raw. Some businesses are processing it into cocoa powder and chocolate. But even though it has been recognized as a 4-star OCOP product of the province, market development and brand recognition are still difficult problems.

To achieve 4-star OCOP at the provincial level or 5-star at the national level requires the subjects to spend many years and incur a lot of costs. But the most important star lies in the trust of consumers. This is something that many OCOP products have not yet reached. When most of the subjects are cooperatives and small businesses, the problem of branding and promotion is even more difficult.

Aviation accelerates on April 30, nearly 700 flights per day

Airlines increase flights sharply during the April 30-May 1 holiday. Illustrative photo

According to the Civil Aviation Authority, on the occasion of the April 30 - May 1 holiday, Vietnamese airlines are expected to operate 7,536 flights on domestic routes, an average of 685 flights/day.

Specifically, from April 25 to May 5, airlines are expected to provide about 1.5 million seats, an increase of 20% compared to the flight schedule before increasing flights and 22% compared to the same period last year.

The majority of flights are to and from Ho Chi Minh City with 5,083 flights, an average of 462 flights/day, providing 1.03 million seats.

For the Hanoi - Ho Chi Minh City route alone, airlines plan to operate 1,261 flights, providing 305,000 seats.

During the peak summer season of 2025 (from May 15 to August 15), on domestic routes, airlines also plan to operate 68,558 flights, an average of 745 flights/day, approximately 14 million seats.

Of which, flights to and from tourist destinations (Cam Ranh, Phu Quoc, Da Lat, Quy Nhon) can operate more than 20 thousand flights, with nearly 4.1 million seats.

The main routes (Hanoi, Da Nang and Ho Chi Minh City) are expected to operate 26,800 flights, providing nearly 5.9 million seats.

For flights to and from Ho Chi Minh City alone, airlines plan to operate 45,000 flights with an average of 490 flights/day, providing 9.23 million seats.

Also according to the Civil Aviation Authority, based on market demand and the airlines' operating plans, this unit has increased the coordination parameters to 46 flights/hour during the daytime and 36 flights/hour during the nighttime during the April 30 - May 1 holiday period; 44-46 flights/hour during the daytime and 36 flights/hour during the nighttime during the peak summer period of 2025 and the National Day holiday of September 2.

Next to the T3 passenger terminal at Tan Son Nhat International Airport, it is ready to be put into operation on the occasion of April 30 - May 1.

HOAI TAM synthesis

Source: https://baohaugiang.com.vn/kinh-te/ban-tin-kinh-te-thi-truong-ngay-25-3-2025-de-xuat-giam-2-thue-vat-den-het-nam-2026-140433.html