The Ministry of Finance seeks opinions on the proposal to continue reducing VAT in the first 6 months of 2024
The Ministry of Finance has just issued Official Dispatch No. 11239/BTC-CST to relevant ministries and branches to ask for opinions on reducing value added tax (VAT) in the first 6 months of 2024. Accordingly, the Ministry of Finance proposed Continue to reduce VAT by 2% as currently applied in the first 6 months of 2024 to support businesses and people to overcome difficulties.
Reduce VAT to stimulate demand. Illustration photo: H. Tuan
Continue to reduce VAT by 2%
According to the Ministry of Finance, the implementation of VAT reduction for a number of groups of goods and services currently applying the 10% VAT rate has been implemented stably in 2022 and 2023. Therefore, the Ministry of Finance has issued an official dispatch reporting to the Prime Minister to continue reducing VAT as stipulated in Resolution No. 43/2022/QH15 and Resolution No. 101/2023/QH15.
Accordingly, a 2% reduction in VAT rate applies to groups of goods and services currently subject to a tax rate of 10% (to 8%), except for the following groups of goods and services: Telecommunications, information technology, financial activities, banking, securities, insurance, real estate business, metal production and production of prefabricated metal products, mining industry (excluding coal mining) , production of coke, refined petroleum, production of chemicals and chemical products, goods and services subject to special consumption tax.
The tax reduction period will be calculated from January 1, 2024 to June 30, 2024. The National Assembly Standing Committee will consider and decide to continue reducing VAT after June 30, 2024 if the economic situation, businesses and people are still difficult, and report to the National Assembly at the nearest session. .
Assessing the impact on state budget revenue (state budget), the Ministry of Finance calculated that reducing VAT by 2% in the first 6 months of 2024 is expected to reduce state budget revenue by about 25 trillion VND (about 4.175 trillion VND/month, Of which, the reduction in domestic revenue is 2,700 billion VND; the reduction in import revenue is about 1,475 billion VND).
The above data is calculated based on the expected reduction in state budget revenue at the domestic stage in the last 6 months of 2023 (average monthly is about 2,550 billion VND), assuming GDP growth in 2024 is about 6-6.5%. , the growth rate of state budget revenue in 2024 is about 5-7%.
According to the Ministry of Finance, to overcome and offset the impacts on state budget revenue in the short term as well as ensure proactiveness in managing state budget estimates, the Ministry of Finance will coordinate with relevant ministries, branches and localities. The method focuses on directing and effectively implementing tax laws. At the same time, continue to reform and modernize the tax system, simplify tax administrative procedures; At the same time, drastic state budget revenue management, focusing on timely and effective implementation of revenue management solution groups, preventing revenue loss, transfer pricing, and tax evasion.
Solutions to stimulate consumer demand and support growth recovery
Assessing the necessity of continuing to propose a 2% VAT reduction, the Ministry of Finance said that the Covid-19 epidemic has caused lasting consequences, along with natural disasters, storms and floods that have damaged the economy. Society faces many difficulties and challenges. The focus on drastic and synchronous implementation of financial policy solutions in recent times has had a positive impact in supporting businesses and people to stabilize production and business and return life to normal. Thereby, contributing to stabilizing the macroeconomy, creating favorable conditions to promote economic recovery and growth. In the period 2020-2023 alone, policies supporting the economy are at an unprecedented level. From 2020 up to now, the total value of solutions for exemption, reduction and extension of taxes, fees, charges and land rent (CIT, PIT, VAT, SCT, import tax, environmental protection tax, , fees and land rent) has amounted to about 700 trillion VND. In 2023 alone, about 196 trillion VND and as of September 2023, about 152.2 trillion VND has been implemented.
However, after a long period of resistance to the Covid-19 pandemic, production and business activities continue to face difficulties. The number of businesses exiting the market or temporarily exiting the market increased to 19.9% compared to the first 9 months of 2022. It is forecast that the world situation will continue to become complicated and unpredictable. Domestically, although many industries and fields continue to recover and have positive prospects, many policies and solutions to remove difficulties and obstacles have been effective, but difficulties and challenges remain. more favorable. “When export activities decline, increasing total domestic consumer demand will be an important measure to help consume goods for manufacturing enterprises and support growth recovery. Therefore, it is necessary to continue to have financial policy solutions to promote aggregate domestic consumption demand,” the drafting agency emphasized.
In order to promptly respond to developments in the socio-economic situation, while considering and calculating in accordance with actual conditions, the Ministry of Finance believes that it is necessary to drastically and effectively deploy tax support solutions , fees, charges and land rent issued in 2023. In addition, continue to research and propose a number of solutions to reduce taxes, fees and charges for 2024, including considering reducing VAT 2 % and reduce the environmental protection tax on gasoline and oil as applied in 2023; Continue to review and reduce export and import tax rates to support domestic production and business; Reduce the collection of some fees and charges. Based on the assessment of the results achieved by the 2% VAT reduction solution according to Resolution No. 101/2023/QH15, it is necessary to continue implementing VAT reduction in the first 6 months of 2024 to support businesses and people. set.
Kim Chung
Source Financial magazine https://www.mof.gov.vn/webcenter/portal/btcvn/pages_r/l/tin-bo-tai-chinh?dDocName=MOFUCM289995
