Vietnam proposes 2% VAT cut on select goods, services until 2026 end

He presented the proposal during the ongoing National Assembly (NA) session.

The VAT reduction will not apply to some sectors like telecommunications, financial services, banking, insurance, securities, real estate, metal products, mining (excluding coal) and items subject to special consumption tax (except for gasoline), according to the proposal.

Additionally, the government has proposed adding gasoline to the list of goods eligible for the 2-per cent VAT reduction as gasoline prices directly influence production costs, consumer prices and overall macroeconomic stability.

The reduction will contribute to macroeconomic stability despite potential short-term revenue loss, the minister said.

He said the move would encourage business expansion, create jobs and ultimately result in long-term economic benefits.

The ministry projected that the reduction will lead to a decrease in state revenue by nearly VNÐ121.74 trillion (over $4.69 billion) over the proposed period. This includes an estimated VNÐ39.54 trillion in the second half of 2025 and VNÐ82.2 trillion in 2026.

The policy is expected to lower the price of goods and services, thereby supporting consumer spending, stimulating consumption and promoting business and production activities. This, in turn, is anticipated to create jobs, stabilise the macro economy, and drive economic growth, domestic media outlets reported.

The VAT reduction will help consumers cut daily living and consumption costs. Businesses will also benefit from lower product costs, improved competitiveness, expanded markets for consumption and production, and increased job opportunities.

However, the ministry was urged by many to consider expanding the VAT cut to cover all goods and services, especially if the revenue difference between included and excluded groups is minimal.

Fibre2Fashion News Desk (DS)