Consumers shop at AEON Mall Long Biên. The National Assembly has approved to extend the reduction of value added tax (VAT) from 10 per cent to 8 per cent to the end of June. — VNA/VNS Photo Trần Việt

HÀ NỘI — The National Assembly has approved an extended reduction of value added tax (VAT) from 10 per cent to 8 per cent until the end of June.

According to a resolution passed on Saturday, goods and services subject to the 10 per cent tax rate will continue to enjoy an 8 per cent rate for another six months.

The VAT reduction is not applied to real estate, securities, banking, telecommunications, information and technology, coal, chemicals and products and services subject to special consumption tax.

Extending the VAT reduction is expected to help stimulate consumption and support production and business by lowering the cost of goods and services, as the economy continues to struggle, economic expert Đinh Trọng Thịnh said.

The Ministry of Finance estimated that the VAT reduction will cause a drop in State budget revenue of around VNĐ26.1 trillion (US$1.028 billion) in the first half of 2025. However, it will help promote production and business, which will also create revenue for the State budget.

A VAT reduction has been applied since 2022 to support production and business and promote consumption after the COVID-19 pandemic.

In 2022, the VAT reduction added up to VNĐ51.4 trillion, which helped accelerate domestic consumption. The total retail sale of goods and services increased that year by 19.8 per cent against 2021.

The VAT reduction in the second half of 2023 totalled VNĐ23.4 trillion, with the total retail sales of goods and services rising by 9.6 per cent in 2023.

Estimates place the total cost of the VAT reduction in 2024 at around VNĐ49 trillion. — VNS