Key lawmakers support extension of VAT reduction policy till year’s end

The consensus was reached at the 34th sitting of the National Assembly in Hanoi on June 13, and the proposal will be submitted to the ongoing session of the National Assembly for consideration and approval.

Under the Government’s proposal, the 8% VAT rate will be continued to apply to lines of goods and services, except for telecommunications, information technology, finance-banking activities, securities, insurance, real estate business, metals, prefabricated metal products, mining products (excluding coal mining), coke, refined petroleum, chemical products, as well as goods and services subject to special consumption tax.

The extension of the 2% tax reduction period will lead to a reduction of about VND24 trillion in budget revenue in the second half of this year, along with nearly VND23.5 trillion in the first half.

However, the Government believes that such a policy will contribute to reducing costs and selling prices of goods and services, thereby helping to promote production and business and maintain jobs for workers, as well as macroeconomic stability and economic recovery.

According to the National Assembly’s Budget and Finance Committee, some members of the committee did not support the policy which they said is no longer effective in stimulating consumption at present because people’s purchasing power and domestic consumption have decreased significantly.

They suggested that the Government more carefully evaluate the possibility to achieve the goal of stimulating consumption demand, insisting that the State need a huge source of capital for salary reform, investment spending and other essentials.

Some others suggested reducing the 2% rate on all lines of goods and services, instead of excluding some items as currently.