The Government proposes to extend the 2% VAT reduction policy until the end of 2026

On May 13, the National Assembly heard the Government's submission on the draft Resolution on reducing value-added tax (VAT). Accordingly, the Government proposed to continue applying the policy of reducing the VAT rate by 2% for goods and services currently subject to the rate of 10%, down to 8%, applicable until December 31, 2026.

According to the Proposal, the proposed tax reduction does not apply to a number of groups of goods and services including: 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).

Finance Minister Nguyen Van Thang presented the Government's proposal on reducing value-added tax. (Photo: National Assembly Portal)

It is expected that the reduction of VAT according to the above plan will reduce the State budget revenue by about VND 121,740 billion in the last 6 months of 2025 and the whole year of 2026. However, according to the Government's assessment, this policy will contribute to reducing the cost of goods and services, supporting production and business, creating more jobs and promoting economic growth in the context of the economy still facing many challenges.

For people and businesses, a 2% reduction in VAT will directly reduce people's costs in consuming goods and services. At the same time, it will help businesses reduce production costs, lower product prices, and increase the competitiveness of their products.

Examining the content of the Proposal, the majority of opinions in the Economic and Financial Committee agreed with the Government's proposal. The examining body believes that applying this tax reduction policy for a longer period (18 months) and with an expanded scope is necessary, and that issuing a separate resolution of the National Assembly is appropriate.

However, some opinions are concerned that the continuous extension of the tax reduction policy from 2022 to now may set a bad precedent, reducing the stability and consistency of the tax system. The extension of the policy also affects fiscal space, limiting the ability to manage the budget in case of major economic fluctuations.

In addition, there are suggestions that the Ministry of Finance review the groups of goods and services that have not yet been subject to tax reduction. If the difference in VAT revenue is not significant, a reduction can be considered across the board to ensure fairness among sectors and fields.

Previously, the National Assembly had decided to reduce VAT by 2% for groups of goods and services currently subject to a tax rate of 10% (to 8%) from 2022 to the first 6 months of 2025, except for certain groups of goods and services. According to the Government, this policy has created great conditions to help businesses reduce production costs, increase profits, and increase the ability to stimulate demand. However, the domestic economy is still under a lot of pressure, especially after the US announced reciprocal tax measures against a number of countries, including Vietnam. Therefore, to continue to create momentum for economic recovery and development, the Government proposed to continue maintaining the VAT reduction policy.

According to the schedule of the 9th session, on June 17, the National Assembly will vote to approve the draft Resolution of the National Assembly on reducing value added tax.

Source: https://thoidai.com.vn/chinh-phu-de-xuat-gia-han-chinh-sach-giam-2-thue-vat-den-het-nam-2026-213459.html