Government agrees to cut VAT to 8%

The government has assigned the Ministry of Finance to prepare a proposal seeking the National Assembly's approval to reduce VAT from 10% to 8%.

In a document released on Monday, Deputy Prime Minister Le Minh Khai assigned the finance ministry to report to the government before April 25.

Previously , the ministry proposed reducing VAT by 2% for goods and services taxable at 10%, effective until the end of 2023.

In 2022, VAT was cut to 8% to help businesses recover from the pandemic. According to the finance ministry, the continued application of the policy this year is necessary to stimulate consumption demand, bolster production, and help businesses to recover and contribute more to the state budget.

The ministry estimates budget losses of VND5.8 trillion ($247 million) per month and VND35 trillion ($1.49 billion) in the last six months of this year if the tax is cut.

It also proposed lowering 35 fees and charges in the second half of the year, equivalent to VND700 billion ($29.8 million), to support businesses and people.