The Vietnamese government has approved of the Ministry of Finance’s proposal on a two-percent reduction in the value added tax (VAT) on all goods and services now subject to a 10-percent tax rate.

Deputy Prime Minister Le Minh Khai agreed in principle that the Ministry of Finance send the proposal to the government for submission to the lawmaking National Assembly (NA) and the NA Standing Committee for consideration and issuance of a resolution on the VAT reduction, according to a document issued by the Government Office to the ministry on Monday.

The Ministry of Finance was assigned to coordinate with the Ministry of Justice and other relevant ministries and agencies to draft the resolution and submit it to the national government by April 25.

The Ministry of Finance had earlier proposed revising down the VAT to eight percent for all goods and services currently subject to a 10-percent tax rate.

It suggesed a 20-percent cut in the percentage of goods for VAT calculation for business establishments when issuing invoices for goods and services subject to the tax.

The ministry also suggested cutting 35 kinds of fees and charges for local enterprises and residents in the second half of this year, totaling some VND700 billion (US$29.8 million).

These policies were proposed to be applicable from July 1 to December 31 this year.

The domestic and global markets have shown volatility since October last year, resulting in challenges for enterprises, according to the Ministry of Finance.

This was manifested in a monthly fall in state budget revenue in the first quarter of this year.

The country’s import-export turnover last quarter slid over 16 percent year on year.

The VAT reduction proposal is aimed at stimulating consumption, production, and business.

If the proposal is approved, it will result in a reduction of VND5.8 trillion ($246.9 million) for the state budget revenue per month or VND35 trillion ($1.5 billion) for the second half of this year.

The NA last year issued Resolution 43 including a two-percent VAT reduction for certain goods and services subject to a 10-percent tax rate.

The policy helped reduce the tax burden by VND44 trillion ($1.9 billion) for residents and businesses.

Like us on Facebook or  follow us on Twitter to get the latest news about Vietnam!