National Assembly approves 2% VAT reduction, expanding many areas enjoying tax incentives

VAT - Ảnh 1. — Minister of Finance Nguyen Van Thang - Photo: Quochoi.vn

Accordingly, the National Assembly resolved to reduce the VAT rate by 2%, applicable to groups of goods and services currently subject to a tax rate of 10%.

Expanding product groups enjoying tax incentives

Some groups of goods and services continue to be excluded and not subject to VAT reduction, 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).

In the report on receiving, explaining and revising the draft resolution before National Assembly delegates voted, Minister of Finance Nguyen Van Thang said that some opinions suggested applying a 2% VAT reduction for all goods.

However, there are also opinions suggesting that instead of reducing 2% for many subjects, there should be a 4-5% reduction for the right subjects in need of support.

According to the Minister, in the draft resolution, the Government proposed to continue reducing the tax rate by 2% for groups of goods and services currently applying a tax rate of 10% (to 8%), except for some groups of goods and services that are not subject to reduction.

However, this VAT reduction policy expands the subjects eligible for tax reduction compared to the provisions in previous National Assembly resolutions and extends the tax reduction period until the end of 2026.

Including transportation, logistics, goods, information technology services, etc. In addition, teaching, vocational training, medical services, services such as finance, banking, securities, and insurance are not subject to tax, so there is no need to reduce taxes.

However, telecommunications and real estate services are industries that have grown in recent times and are not subject to VAT reduction according to the provisions of Resolution No. 43/2022 of the National Assembly.

The Minister of Finance said that according to the plan submitted by the Government, the expected reduction in state budget revenue in the last 6 months of 2025 and the whole year of 2026 is about 122,000 billion VND.

Tax reduction stimulates production and promotes business

In case of implementing tax reduction according to the plan of reducing all items subject to VAT rate of 10%, it is expected that the budget revenue will decrease by the equivalent of 167,000 billion VND. Therefore, the drafting agency requests to keep the plan as in the draft resolution submitted to the National Assembly for approval.

In response to concerns that continued tax reductions will affect spending tasks, the Minister of Finance affirmed that VAT reductions will reduce budget revenue but also stimulate production and promote business activities.

This will contribute to creating additional revenue for the state budget (including the possibility of increasing revenue from other taxes thanks to the spillover effect of the VAT reduction policy).

However, in order to make up for the revenue shortfall due to policy implementation, the Government will focus on directing the collection of state budget, strengthening management, reforming administrative procedures, and promoting digital transformation in tax management.

Especially in key areas and areas, revenue from land, real estate transfer, e-commerce activities, and digital business activities. Therefore, the Government set a target of striving for state budget revenue in 2025 to be about 10% higher than the estimated implementation in 2024.

The Minister of Finance also emphasized that the Government will direct the management of budget expenditures closely, increase savings in expenditures; proactively use reserves and other legal resources to spend on prevention and control of natural disasters, epidemics and urgent tasks arising, ensuring budget balance at all levels.

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Source: https://tuoitre.vn/quoc-hoi-thong-qua-giam-2-vat-mo-rong-nhieu-linh-vuc-huong-uu-dai-thue-20250617091642696.htm