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May 2024 Tax Alert (2)

Proposal to continue 2% Value Added Tax (“VAT”) reduction for the last 6 months of 2024

 

Aiming to support businesses and individuals in the wake of the significant impacts of the COVID-19 pandemic, the Government has submitted Proposal No. 177/TTr-CP to the National Assembly, suggesting continue the reduction of 2% VAT rate for certain categories of goods and services. This policy is proposed for implementation in the last 6 months of 2024, targeting categories of goods and services subjected to 10% VAT.

 

According to the Government's report, the COVID-19 pandemic has caused severe consequences, affecting all aspects of life and the socio-economic landscape. Moreover, other factors such as climate change and natural disasters have presented additional major challenges. In this context, the 2% VAT reduction is seen as an important solution to support business operations and encourage domestic demand.

 

From January to March 2024, the 2% VAT reduction helped businesses, individuals save approximately 11.488 trillion VND. If this policy continues for the last six months of 2024, the estimated tax reduction would be around 24 trillion VND, bringing the total tax reduction for 2024 to 47.488 trillion VND.

 

In terms of implementation, the Government has proposed to the National Assembly to continue applying the 2% VAT reduction policy for categories of goods and services specified in point a, section 1.1, clause 1, Article 3 of Resolution No. 43/2022/QH15 on economic recovery and development, from 1 July 2024 to 31 December 2024, as part of the National Assembly's resolution for the 7th session of the 15th National Assembly.

 

In addition to continuing the VAT reduction policy, the Government also emphasized the importance of other financial measures, including extending VAT, corporate income tax, excise duty, personal income tax, and reducing certain fees, levies, and land rental costs. These measures are designed to alleviate the financial burden on businesses and support the recovery of the economy.


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May 2024 Tax Alert (2) - RSM Hanoi
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