VCCI: Should reduce 2% VAT for all goods

To help businesses fully benefit from the value-added tax reduction policy, VCCI proposed reducing the rate for all goods and services from 10% to 8%.

The Vietnam Federation of Commerce and Industry (VCCI) has just commented to the Ministry of Finance on reducing value-added tax for the first 6 months of 2024.

According to the draft, the 2% reduction in value added tax (VAT) is expected to apply to a group of goods and services currently subject to a tax rate of 10%. Some groups of goods and services that are excluded from VAT reduction include: telecommunications, information technology, financial activities, banking, securities, insurance, real estate business, metal production and production of prefabricated metal products, mining (excluding coal mining), coke production, refined petroleum, production of chemicals and chemical products, goods and services subject to special consumption tax.

VCCI assessed that extending the 2% VAT reduction to the first half of 2024 is necessary, contributing to helping businesses regain growth momentum and create jobs. Currently, Vietnam's economic situation is still facing many difficulties and this situation is expected to continue in the first half of next year.

However, VCCI's records also show that businesses have encountered many difficulties when applying the VAT reduction policy. The main reason is the classification of which goods are subject to 10% tax and which goods are reduced to 8%.

VCCI said the Government has issued decrees to guide implementation, but in reality, the classification of goods and services into different tax rates is still confusing.

Some businesses reported that despite looking up, they still did not dare to confirm whether their goods and services were subject to a 10% or 8% tax rate. Some businesses asked the tax and customs authorities, but these agencies did not dare to confirm for the businesses for fear of being wrong. Some other businesses had to hire additional accountants to adjust invoices and books to match the new tax rate.

"Some businesses said they had reached an agreement with customers on quantity, quality, and price, but could not agree on the tax rate of 8% or 10%, so they could not sign the contract," VCCI said.

Therefore, to facilitate businesses, VCCI recommends that the drafting agency consider the option of reducing value-added tax for all goods and services from 10% to 8%.

Previously, on October 24, the Vietnam Banking Association also proposed adding banks to the group eligible for a 2% VAT reduction to create conditions for credit institutions to have more resources to support businesses and invest in digital transformation technology.

According to the Association, the operations of credit institutions are currently facing difficulties, with bad debts and potentially risky debts tending to increase. The operating results of credit institutions in 2023 and 2024 are forecast to decline sharply compared to previous years, especially small-scale credit institutions. Meanwhile, these units still have to implement interest rate support programs and service fee exemptions for businesses and people.

Duc Minh

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