The National Assembly Standing Committee convenes on Wednesday to discuss extending the value added tax (VAT) reduction policy. — VNA/VNS Photo Doãn Tấn

HÀ NỘI — The two per cent reduction in value added tax (VAT) might be extended until the end of 2026, a meeting of the National Assembly (NA) Standing Committee has heard.

The committee met on Wednesday morning to review the Government’s proposal to extend the VAT reduction policy for goods and products subject to the 10 per cent VAT rate, excluding several sectors, such as telecommunications, financial and banking services, securities, insurance, real estate, and metal products. 

The applicable period would be from July 1, 2025, to December 31, 2026.  

Reviewing the Government’s proposal, Deputy Minister of Finance Cao Anh Tuấn said that this policy is necessary to help drive and develop the economy, support citizens and businesses, incentivise production and promote tourism and domestic consumption for the next two years. 

The VAT reduction is expected to lower the cost of goods and services, thereby promoting business activity and creating more jobs. This will contribute to macroeconomic stability and economic growth from the second half of 2025 to the end of 2026. 

The extension also aims to reduce consumers’ costs for goods and services, while helping businesses lower their production costs and prices, increasing their competitiveness on the market. 

He also noted that the revenue decrease to the State budget during this one and a half year period is estimated at VNĐ121.74 trillion (US$4.7 billion). 

The chairman of the NA’s Committee on Economic and Financial Affairs, Phan Văn Mãi, said that the majority of committee members supported issuing a resolution to continue the VAT reduction to the end of 2026. 

The Committee also agreed on the Government’s proposal to extend the list of goods and services eligible for the reduction policy, including those affected by the US retaliatory tariffs and global trade war. 

Some policymakers pointed out that only three groups of goods and services are currently excluded from the VAT reduction. They suggested that if a review by the Ministry of Finance finds the two per cent VAT reduction for these groups to be insignificant, the tax cut should be extended to all goods and services to ensure fairness.

Addressing the meeting, Deputy Prime Minister Hồ Đức Phớc said that forecasts show the economy in the second half of the year will be affected by US tariffs, which means extended tax reduction policies are necessary to support businesses in maintaining stable operations and enhancing competitiveness.

He also noted that Việt Nam’s VAT rate of 10 per cent is lower than other countries and the two per cent cut has been implemented for the past four years to help businesses recover from the pandemic. 

“In July, we will guide the preparation of the 2026 budget estimates and financial and public debt plans for the next term, including a full report on spending forecasts,” said Phớc.

“This year, severance payments and administrative streamlining costs were covered by accumulated wage funds, along with support from the State budget. Next year, we will report on tax policies and revenues to ensure balance for 2026 and the next five years.”

Concluding the meeting, NA Vice Chairman Nguyễn Đức Hải said that the NA Standing Committee agreed with the Government’s proposal aimed at promoting production and business.  

The Government is requested to complete the proposal dossier before submitting it to the NA for consideration at the upcoming ninth session in early May. — VNS