Reducing VAT contributes to stimulating consumer demand, reducing prices of goods and services, and reducing production costs. Photo: T.H

Assessing the implementation of the policy of reducing the VAT rate by 2%, Ho Chi Minh City Customs Department said that in 2023, the amount of VAT reduced (corresponding to 2%) was implemented at the branches of the Ho Chi Minh City Customs Department for the following case: The enterprise has import-export activities of about VND 8,675 billion.

According to Ho Chi Minh City Customs Department, during the implementation of the Decree on VAT reduction at the unit, a number of difficulties and problems arose related to identifying and distinguishing goods and services that are not eligible for VAT reduction, because they must be based on the physical and chemical properties and technical characteristics of the goods to differentiate, focusing on product groups: electrical and electronic goods; goods are chemicals and chemical products; goods are information technology products.

From the above problem, in order to have a basis for applying the 2% VAT tax rate reduction or not, customs officials must base and refer to the guiding documents of relevant ministries and branches to make a decision. However, some new products do not have specific guidance documents from ministries and branches, leading to inconsistent application and not really creating favorable conditions for businesses.

According to Ho Chi Minh City Customs Department, in the context of the world and domestic economy facing many difficulties and challenges, reducing VAT is one of the measures for the Government to share and accompany businesses and consumers, contributing to stimulating consumer demand, reducing prices of goods and services, and reducing production costs. Thereby promoting production and business, increasing competitiveness, increasing consumption of goods and creating more jobs to increase income for workers, while also contributing to generating more revenue for the state budget.

From the above assessments, in order to continue to stimulate consumption demand, in accordance with the current economic context, promote production and business activities to soon recover and develop to contribute back to the state budget as well as economy, extending the VAT reduction policy is necessary.

In addition, the reduction of VAT will also continue to contribute to reducing production costs, reducing prices and selling prices of goods and services, contributing to promoting production and business and maintaining jobs and income for employees, contributing to macroeconomic stability and economic recovery in 2024, creating a premise for the following years.

To facilitate the business community in reducing VAT, the Ho Chi Minh City Customs Department proposed that the Ministry of Finance advise the Government to apply a 2% VAT rate reduction for all groups of goods and services which subject to a 10% VAT rate, uniform at all stages of import, production and consumption.