VAT reduction of 2% until 2026 to create foundation for double-digit growth

Minister of Finance Nguyen Van Thang presented the Draft Resolution on reducing value added tax. (Photo: Vietnam+)

On May 13, authorized by the Prime Minister , Minister of Finance Nguyen Van Thang presented the Draft Resolution on reducing value added tax.

According to the proposal, the Government proposed to reduce the value-added tax (VAT) rate by 2% for groups of goods and services currently subject to a tax rate of 10%, bringing the actual tax rate down to 8%. This policy is expected to last until December 31, 2026.

Budget revenue reduced by about 121 trillion VND

Minister Nguyen Van Thang emphasized that the goal of tax reduction is to institutionalize the socio-economic development target for 2025 with a growth target of 8% or more. Accordingly, the Government expects this policy to contribute to creating a solid foundation for achieving double-digit growth in the 2026-2030 period.

According to the draft Resolution, the 2% reduction in value-added tax rate will apply to most groups of goods and services currently subject to a tax rate of 10%. However, some specific sectors are still outside the scope of regulation, including telecommunications, financial activities, banking, securities, insurance, real estate business, metal products, mining products (except coal), and goods and services subject to special consumption tax (except gasoline).

Explaining this, Minister Nguyen Van Thang said that excluding some areas is to ensure the stability of budget revenue while complying with international commitments and other tax policies.

In fact, the policy of reducing value-added tax has been applied in the period from 2022 to the first months of 2025. Accordingly, the reduction of value-added tax along with other support solutions on taxes, fees, and charges has created great conditions to help businesses reduce production costs, increase profits, and increase the ability to stimulate demand.

Regarding the policy application period, the majority of opinions in the Economic and Financial Committee agreed with the Government's proposal to continue applying the policy for the last 6 months of 2025 and 2026.

On that basis, the Government believes that continuing to implement the policy of reducing value-added tax is necessary to create momentum to promote and develop the economy while supporting people and businesses to overcome difficulties.

According to the Ministry of Finance's assessment, the reduction in value-added tax is expected to reduce the state budget revenue by about VND 121.74 trillion in the last 6 months of 2025 and the whole year of 2026. However, Minister Nguyen Van Thang emphasized that the reduction in value-added tax will contribute to reducing the cost of goods and services, thereby promoting production and business and creating more jobs, contributing to stabilizing the macro economy and economic growth.

Attaching the target of medium-term fiscal stability

The review report of the Economic and Financial Committee also recorded many opinions agreeing with the necessity of issuing the Resolution. However, Chairman of the Committee Phan Van Mai also noted a number of issues that need attention. Specifically, some opinions said that continuing to propose issuing policies is not really appropriate and difficult to achieve the set goals of stimulating consumption. Moreover, the policy's ability to stimulate demand has been saturated after a long period of implementation.

In addition, the repeated extension and extension of tax cuts could set a bad precedent, leading to unstable and inconsistent tax policy. The reduced fiscal space could also reduce the ability to respond to more severe economic crises in the future.

Chairman of the Committee Phan Van Mai said the review report recorded many opinions agreeing with the necessity of issuing the Resolution.

To ensure the effectiveness of the policy, the Economic and Financial Committee recommends that the Government have effective solutions to overcome difficulties and obstacles in implementation. It is necessary to ensure that the target is easy to achieve, create favorable conditions for taxpayers, and at the same time, assess more carefully the impact on the State budget revenue. Specifically, the Government ensures that the implementation of the tax reduction policy is associated with the goal of medium-term fiscal stability and public debt safety, ensuring consistency with other tax policies. Some opinions also suggest reviewing the items affected by the trade war and the US's reciprocal tax policy and considering tax reduction for all goods and services to ensure fairness.

Regarding the policy application period, the majority of opinions in the Economic and Financial Committee agreed with the Government's proposal to continue applying the policy for the last 6 months of 2025 and 2026.

According to VNA

Source: https://baothanhhoa.vn/giam-vat-2-het-nam-2026-de-tao-nen-tang-cho-tang-truong-hai-con-so-248631.htm