2% VAT reduction from July 1

The National Assembly agreed to reduce value-added tax (VAT) by 2% until the end of this year, except for telecommunications, real estate, securities, insurance, and banking products.

On the afternoon of June 24, the National Assembly passed a joint resolution of the session, including a resolution to reduce value-added tax (VAT) by 2% according to Resolution 43/2022. This tax reduction will be implemented from July 1 to the end of this year.

Thus, VAT will be reduced to 8%, but will not apply to groups of goods such as telecommunications, information technology, finance, banking, securities, insurance, real estate business, metals, prefabricated metal products, mining products, refined petroleum, chemical products and items subject to special consumption tax.

The National Assembly voted to pass the Resolution of the 5th session on the afternoon of June 24. Photo: Hoang Phong — The National Assembly voted to pass the Resolution of the 5th session on the afternoon of June 24. Photo: *Hoang Phong*

The National Assembly assigned the Government to effectively implement, ensuring that it does not affect the revenue and budget deficit estimates for 2023. The Government will report on the implementation results at the 6th session, at the end of this year.

During the previous discussion, many National Assembly deputies proposed expanding the scope of VAT reduction by 2%, which means applying it to all goods and services currently subject to a tax rate of 10%. Other opinions wanted to increase the tax reduction to 3-5% and extend the implementation period of this policy until mid-2024 or the end of 2024.

However, the National Assembly Standing Committee believes that further expansion of the service sector, goods and tax reduction will impact the State budget revenue. Meanwhile, the Government has not fully calculated and assessed the impact, especially in the context of budget revenue in the first 5 months of the year decreasing compared to the same period in 2022. Therefore, VAT reduction will not be expanded to all goods and services subject to a tax rate of 10%.

It is estimated that this year's budget will lose about VND24,000 billion when VAT is reduced to 8% in the second half of the year.

Mr. Minh

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