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| The Ministry of Finance has proposed a 2% reduction in VAT on petrol products from July 1, 2025, to the end of 2026. (Photo: VNA) |
The Ministry of Finance (MoF) is seeking public feedback on a draft resolution that proposes a 2% reduction in value-added tax (VAT) to stimulate economic growth, support businesses, and boost consumption.
The draft resolution suggests extending the 2% VAT reduction, currently in place for goods and services taxed at 10%, from July 1, 2025, to December 31, 2026. This would result in an effective VAT rate of 8% for these items.
However, certain key sectors, such as telecommunications, finance and banking, securities, insurance, real estate, metal products, and mining (excluding coal), will be excluded from this VAT reduction. Additionally, goods and services subject to special consumption tax, with the exception of gasoline, are not covered under this proposal.
The draft resolution expands the list of items eligible for VAT reduction to include washing machines, microwaves, data processing services, and prefabricated metal products like barrels, tanks, and boilers. Gasoline and oil are also proposed for tax cuts due to their critical role in production, consumption, and macroeconomic stability.
According to the MoF, reducing VAT will lower the costs of goods and services, encouraging production and business expansion, and facilitating job creation. This policy is also expected to directly benefit consumers by reducing the cost of essential goods and services, leading to improved living standards.
The MoF estimates that the proposed VAT reduction will result in a decrease in state budget revenue of approximately VND 121.74 trillion (USD 4.8 billion). This includes a projected loss of VND 39.54 trillion in the last six months of 2025 and VND 82.2 trillion in 2026.
Furthermore, the ministry noted that the VAT reduction policy, implemented since 2022 to support post-pandemic recovery, has provided support worth VND 123.8 trillion over the past three years. In the first two months of this year alone, the tax cut is estimated to have amounted to VND 8.3 trillion.
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