MoF seeks feedback on VAT cut plan to boost economy

MoF seeks feedback on VAT cut plan to boost economy

The proposal suggests extending the 2 per cent VAT reduction from July 1, 2025, until the end of 2026, for certain goods and services currently taxed at 10 per cent, lowering them to 8 per cent.

The Ministry of Finance is proposing reducing VAT on petroleum products by 2 per cent from July 1 to the end of 2026. — VNA/VNS Photo

The Ministry of Finance (MoF) is seeking public comments on a draft resolution proposing a 2 per cent reduction in value-added tax (VAT) to stimulate consumption, support businesses and promote economic growth.

The proposal suggests extending the 2 per cent VAT reduction from July 1, 2025, until the end of 2026 for goods and services currently taxed at 10 per cent, lowering them to 8 per cent.

However, key sectors such as telecommunications, finance, banking, securities, insurance, real estate, metal products and mining (except coal) would be excluded. Goods and services subject to special consumption tax, except gasoline, are also not covered.

The draft expands the list of eligible items for VAT reduction, including washing machines, microwaves, data processing services and prefabricated metal products including barrels, tanks and boilers. Additionally, gasoline and oil are proposed to receive tax cuts due to their critical role in production, consumption and overall macroeconomic stability.

According to the MoF, reducing VAT will lower the cost of goods and services, boosting production, business expansion and help job creation. The policy is also expected to benefit consumers directly by reducing the cost of essential goods and services, thereby improving living standards.

The MoF forecasts that the proposed VAT reduction will lead to a decrease in State budget revenue of more than VNĐ121.74 trillion (US$4.8 billion). This includes VNĐ39.54 trillion in the last six months of 2025 and VNĐ82.2 trillion in 2026.

The ministry added that the VAT reduction policy, implemented since 2022 to aid post-pandemic recovery, has provided support worth VNĐ123.8 trillion over the past three years. Over the past two months of this year alone, the tax cut amounted to an estimated VNĐ8.3 trillion. 

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