Government proposes National Assembly cut VAT to 8% in May

The government has proposed the National Assembly issue a resolution to reduce value added tax (VAT) from 10% to 8% to support people and businesses.

The cabinet on Tuesday asked the Ministry of Finance to absorb government members' opinions and complete a draft National Assembly resolution on VAT reduction.

The government also assigned the Minister of Justice to report to the Standing Committee of the National Assembly to add a resolution on VAT reduction to the program of law and ordinance development in 2023.

It proposed the Standing Committee of the National Assembly allow it to draft such a resolution for the legislative body's approval this month.

In mid April, the government had assigned the finance ministry to prepare a proposal seeking the National Assembly's approval to reduce VAT from 10% to 8%.

Previously, the ministry proposed reducing VAT by 2 percentage points 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, continued application of the policy this year is necessary to stimulate consumption demand, bolster production, and help businesses 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.