It passed a resolution to hold a 2-per cent VAT rate reduction for most goods and services subject to a 10-per cent rate. The resolution will take effect from July 1 and remain valid till December 31, 2026.
Sectors that are excluded from the tax cut include telecommunications, finance, banking, securities, insurance, real estate, metal products, mineral products (excluding coal), and goods and services subject to a special consumption tax (excluding fuel).
Sectors like transport, logistics, and information technology services have been added to the list of activities eligible for the reduced rate, according to domestic media reports.
The tax relief will reduce state revenue by an estimated $4.87 billion over the second half of this year and throughout 2026.
The government said while the policy may cause short-term revenue losses, it will also stimulate production and business activities, thereby supporting broader economic growth and potentially increasing tax revenues from other sources.
ALCHEMPro News Desk (DS)
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