Vietnam's ministry proposes 2% VAT reduction from Jul 2025 to 2026 end

The proposal suggests extending the 2-per cent VAT reduction from July 1, 2025, till the end of 2026 for goods and services currently taxed at 10 per cent, lowering them to 8 per cent.

However, key sectors such as telecommunications, finance, banking, securities, insurance, real estate, metal products and mining (except coal) would be excluded. Goods and services subject to special consumption tax, except gasoline, are also not covered.

The draft has expanded the list of eligible items for VAT reduction. Gasoline and oil are proposed to receive tax cuts due to their critical role in production, consumption and overall macroeconomic stability.

The ministry feels reducing VAT will lower the cost of goods and services, boost production, expand business and help create more jobs, though it will also decrease state budget revenue, a domestic media outlet reported.

The VAT reduction policy, implemented since 2022 to aid post-pandemic recovery, has offered support worth VNÐ123.8 trillion over the past three years. In the first two months this year, the tax cut amounted to an estimated VNÐ8.3 trillion.

ALCHEMPro News Desk (DS)