Research on VAT reduction: 'Relaxing people's efforts', sharing the burden with businesses

According to experts' proposals, reducing VAT will stimulate consumption, stimulate production, increase budget revenue, and promote double-digit growth.

"Spare people's strength", accompany businesses

In Official Dispatch No. 22 dated March 9, Prime Minister Pham Minh Chinh assigned the Ministry of Finance to preside over the study and proposal to expand the subjects of value-added tax (VAT) reduction applicable in the last 6 months of 2025 and 2026.

According to experts' proposals, reducing VAT will stimulate consumption, stimulate production, increase budget revenue, and promote double-digit growth. Photo: TT

The Government 's proposal to continue reducing VAT has received high consensus from people, businesses and experts. Partly because this policy, after more than 3 years of implementation (from 2022 to present), has achieved its set goals, which are to stimulate consumption and promote production and business development.

In the context of the economy not really recovering, business production is still limited and people's lives are still difficult, continuing to reduce value added tax (VAT) by 2% plays an important and key role.

It is not simply financial support for people and businesses, but also demonstrates the Government and State's companionship, support, sharing and "compassion for the people".

Looking back at 2022, the implementation of the VAT reduction policy has supported businesses and people with a total of about 51.4 trillion VND. The 2% VAT reduction in the last 6 months of 2023 has also supported businesses and people with about 23.4 trillion VND; and in 2024, the VAT reduction will be about 49,000 billion VND. This has created momentum for year-on-year growth in total retail sales of goods and consumer service revenue. According to data from the General Statistics Office, total retail sales of goods and consumer service revenue in 2022 increased by 19.8%; in 2023 increased by 9.65%; in 2024 increased by 9% compared to the previous year.

This is also one of the driving forces contributing to increasing the State budget revenue. For example, in 2024, the total budget revenue exceeded 2 million billion VND for the first time, an increase of more than 320,000 billion VND compared to 2023.

Another reason for continuing to extend the VAT reduction policy is because of the difficulties that are still haunting businesses. Especially in the current context, our country is aiming for a growth rate of 8% or more, so tax reduction needs to be stronger and more drastic.

Permanent Vice President and General Secretary of the Vietnam Association of Small and Medium Enterprises To Hoai Nam said that many businesses, especially in the field of goods and services, have been forced to close, so the proposal to reduce VAT is in line with the wishes of businesses. The VAT reduction policy helps reduce costs for businesses, thereby reducing product prices and stimulating consumer demand.

Some experts believe that the recent 2% reduction in VAT is considered a triple killer, contributing to reducing the cost of goods and services, promoting production and business and creating more jobs for workers, and stimulating consumer demand and promoting production and business development.

Regarding the issue, Mr. Dau Anh Tuan, Deputy General Secretary of the Vietnam Federation of Commerce and Industry (VCCI), said that with 67,000 enterprises withdrawing from the market in the first two months of 2025, an increase of 10.3% over the same period. This shows that the difficulties of the economy in 2025 still exist.

From there, to support businesses, Mr. Dau Anh Tuan said that the National Assembly and the Government need to continue researching policies to support people and businesses, especially these policies need to be stable and easy to access.

One of the policies that needs to be continued this year is to extend tax and fee support policies such as continuing to extend the 2% VAT reduction. This is an important and highly effective policy that not only supports consumers through tax reduction but also helps to stimulate production and business.

Consider extending tax breaks?

The VAT reduction policy is applicable until June 30, 2025, for a number of groups of goods and services; except for a number of 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...

However, many opinions say that it is necessary to expand the scope of application and extend the tax reduction period to support the economy more effectively to achieve the 8% growth target.

According to National Assembly Delegate Nguyen Quang Huan (Binh Duong Province delegation), businesses are still facing difficulties and have not fully recovered, so there should be preferential policies to stimulate development. Therefore, it is necessary to study and propose continuing to reduce VAT by 2% for the last 6 months of the year and in 2026.

We clearly see that the 2% VAT reduction policy has contributed to stimulating the economy, effectively supporting the production and business activities of enterprises, and at the same time contributing to increasing corporate income tax.

Many opinions also suggest that we should research, evaluate scientifically and specifically the positive aspects and impacts of this tax reduction on the economy. From there, we should carefully review the subjects that continue to receive tax reductions to suit the current situation.

For sustainable development, in macroeconomic management, there needs to be comprehensive research to propose long-term policy to competent authorities, which can last 1, 2 or even 3 years.

Previously, regarding solutions to support economic growth, Dr. Nguyen Dinh Cung, former Director of the Central Institute for Economic Management (CIEM), acknowledged that we are using too little fiscal policy to support businesses, and are even increasing their costs.

In the current context, it is necessary to focus on implementing fiscal policies rather than monetary policies. Accordingly, it is necessary to drastically implement the VAT refund policy for businesses, while extending the implementation period of the VAT reduction policy.

In Official Dispatch No. 22/CD-TTg on a number of key tasks and solutions to reduce administrative procedures, improve the business environment, and promote socio-economic development, the Prime Minister requested research and proposals to expand the subjects of tax reduction and value-added tax reduction applicable in the last 6 months of 2025 and 2026. In particular, in the spirit of the Official Dispatch, the Prime Minister also requested ministries, branches, and localities to carefully review, reduce, and simplify regulations and administrative procedures related to investment, production, and business activities. On that basis, competent agencies should consider expanding the subjects of tax reduction to achieve higher efficiency in promoting economic growth and creating maximum convenience for businesses.

Some economic experts have suggested that extending the VAT reduction policy is the desire and wish of businesses. If this policy is extended until the end of 2025 and into 2026, it will not only help people reduce their financial burden but also support businesses to recover as purchasing power gradually improves.

Duy Anh