News

Value-added tax to be cut from 10% to 8% from February 2022

  • Monday, 17:19 Day 17/01/2022
  • The National Assembly approved to decrease VAT by 2-8 per cent this year, applied on certain goods and services currently taxed with 10 per cent.

    The decrease in VAT will not be applied for goods and services in telecommunication, IT, finance, banking, stocks, insurance, real estate trading, and for goods with special consumption taxes. The decision took effect on January 11 and expires on December 31.

    Previously, the government proposed to cut by 2 per cent of VAT to stimulate the economy. 

    The Covid-19 pandemic has negatively affected many trade and production activities, resulting in weak economic growth in 2020 and 2021, according to the Government.

    “The pandemic does not just cause short-term impacts but also affects the long-term economic plans of five and 10 years. Without appropriate solutions to support the economy, the average economic growth rate of the 2021-2025 period would reach only 5.4% a year, much lower than the target,” the Government said.

    Therefore, the Government has drawn up the scheme on fiscal and monetary policies to support the program for socioeconomic recovery and submitted it to the National Assembly for a review. 

    The Government proposed a fiscal package worth VND291 trillion (US$12.8 billion), including VND240 trillion sourced from the State budget, for the program. The Government planned to reduce and cut taxes, land rentals and fees worth up to VND64 trillion for enterprises, cooperatives and household businesses.

    In accordance with this package, environment protection tax on aviation fuel would be cut by half and VAT would be reduced from 10% to 8% on certain goods and services.

    “The pandemic did not just cause short-term impacts but also affected the long-term economic plans of the next 5-10 years. Without appropriate solutions to support the economy, the average economic growth rate of the period would reach only 5.4 per cent a year, much lower than the target,” the government stated.

    Therefore, the government drew up the scheme on fiscal and monetary policies to support the programme for socioeconomic recovery and submitted it to the NA for review.

    The scheme comprises five major groups of targets and solutions, including reopening the economy while ensuring pandemic prevention and control; improving the healthcare capacity; social security and job support; facilitating the recovery of enterprises, cooperatives, and household businesses; infrastructure development; administrative reforms, and improvement of the business environment.

    In accordance with the package, the environmental protection tax on aviation fuel would be cut by half and VAT would be reduced from 10 per cent to 8 per cent on certain goods and services.

    Source: VIR