Deputy Prime Minister Ho Duc Phoc presented the Report. Photo: National Assembly

According to the agenda of the 8th Session, at the meeting on the afternoon of November 28, 2024, Deputy Prime Minister Ho Duc Phoc presented the Report on the draft Resolution of the National Assembly on VAT reduction.

Accordingly, the VAT rate will be reduced by 2% for groups of goods and services currently subject to a tax rate of 10% (to 8%), except for some groups of goods and services including: telecommunications, information technology, financial activities, banking, securities, insurance, real estate business, metals, prefabricated metal products, mining products (excluding coal mining), coke, refined petroleum, chemical products, goods and services subject to special consumption tax.

The period of application of the 2% VAT reduction is from January 1, 2025 to June 30, 2025.

According to the Deputy Prime Minister, the Resolution was issued to stimulate consumption, in line with the current economic context, thereby promoting production and business activities to recover and develop soon to contribute back to the State budget as well as the economy to implement the 5-year Socio-Economic Development Plan 2021-2025, the Annual Socio-Economic Development Plan, and the Economic Restructuring Plan for the period 2021-2025.

Deputy Prime Minister Ho Duc Phoc presented the Report. Photo: National Assembly

The Government's submission stated that the expected reduction in state budget revenue in the first 6 months of 2025 is equivalent to about VND 26.1 trillion (about VND 4.35 trillion/month, of which the reduction in domestic revenue is about VND 2.85 trillion/month and the reduction in import revenue is about VND 1.5 trillion/month).

In 2024, the amount of VAT reduced according to Resolution No. 110/2023/QH15 and Resolution No. 142/2024/QH15 is estimated at about VND 49 trillion.

"The reduction of VAT has an impact on reducing state budget revenue but also has an impact on stimulating production and promoting production and business activities, thereby contributing to creating additional revenue for the state budget," the report stated.

According to Deputy Prime Minister Ho Duc Phoc, in order to overcome and compensate for the impacts on state budget revenue in the short term as well as ensure proactive management of the state budget estimate, the Government will direct the Ministry of Finance to coordinate with relevant ministries, branches and localities to resolutely implement the solutions assigned by the National Assembly to the Government in Resolution No. 159/2024/QH15 on the state budget estimate for 2025.

At the same time, focus on directing the effective implementation and deployment of tax laws; continue to reform and modernize the tax system, simplify tax administrative procedures.

Presenting the report on examining this content, Chairman of the Finance and Budget Committee Le Quang Manh said that the majority of opinions in the Finance and Budget Committee agreed with the necessity of issuing the Resolution.

The National Assembly has decided on the proposal to assign the Government to organize the implementation and take responsibility for ensuring the revenue collection task and the ability to balance the budget within the 2025 State budget deficit.

However, some opinions disagree with the continued application of the VAT reduction policy and believe that the VAT reduction policy has been issued and implemented since 2022 in the context of businesses and people facing many difficulties due to the Covid-19 pandemic.

The issuance and implementation of the VAT reduction policy should only be considered a temporary solution for a certain period of time to support people and businesses.

Therefore, the continued proposal to issue and implement the VAT reduction policy is not really appropriate.