National Assembly approves extension of VAT cut until year's end

The law-making body passed a resolution to this effect at its fifth session last week receiving the Yes vote from 481 of the 482 deputies.

The VAT cut which has been in place since early last year, is expected to have a significant impact on overall demand and total revenue, with consumers able to pay less and businesses able to benefit from lower input costs. 

The policy of reducing VAT is necessary for businesses and society as a whole because in the first quarter of 2023, a lot of businesses are struggling to keep afloat.

This move will create conditions for businesses to resume production by reducing the price of goods and services, allowing them to sell more.

However, the VAT reduction is excepted for the groups of goods and services as follows: Financial activities, banks, securities, insurance, communications, information technology, real estate business.

The National Assembly also assigned the Government to implement the resolution and ensure negative impacts on budget collection and budget deficit. 

Budget collection is expected to suffer a loss of around VND 24 trillion from the VAT reduction. 

In 2022, with the aim of giving a boost to the economy, the National Assembly issued Resolution No.43/2022/QH15 on fiscal and monetary policies to support the Economic-Social Recovery and Development Program. 

The government then issued Decree No.15/2022/ND-CP, regulating tax exemption and reduction policies according to Resolution No.43/2022/QH15 from the National Assembly. The results have shown that the total VAT reduction support package in 2022 reached around VND44 trillion (US$1.9 billion)./.