The Ministry of Finance has proposed to draft a National Assembly Resolution on the proposal to reduce 2% value added tax (VAT) on some goods and services from July 2025 to the end of 2026. This is to stimulate consumption, in line with the current economic context, thereby supporting people and businesses, promoting production, business, tourism and domestic consumption development. Below, Viet An Law will update some notable contents in the proposal to reduce VAT by 2% in Vietnam 2025 and 2026 after reduce 2% in the whole year 2024.
Table of contents
According to Article 8 of the Law on Value Added Tax 2008, amended in 2013, 2014, and 2016, the current VAT rate is as follows:
Note that from July 1, 2024, new regulations will be applied according to the Law on Value Added Tax 2024. Accordingly, the VAT rate applied according to Article 9 of the Law on Value Added Tax 2024 still includes 3 levels: 0%, 5%, and 10%, but there are changes for some goods and services applied according to each of these tax rates.
On March 24, the Ministry of Finance issued Official Dispatch No. 3624/BTC-CST requesting opinions on the draft Resolution of the National Assembly on reducing value-added tax (VAT) from July 1, 2025, to December 31, 2026.
According to the Draft Resolution on VAT reduction, the Ministry of Finance has proposed a 2% reduction in VAT in 2025 and 2026, specifically Article 1 of the draft stipulates as follows:
“ Article 1. Scope of application
1. Reduce the value added tax rate by 2%, applicable 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, financial activities, banking, securities, insurance, real estate business, metal products, mining products (except coal), goods and services subject to special consumption tax (except gasoline).
2. The period of application of the 2% value-added tax reduction prescribed in Clause 1 of this Article is from July 1, 2025, to December 31, 2026.”
Thus, this regulation has some notable contents:
As analyzed, currently, VAT rates include: 0%, 5%, 10% depending on the type of goods and services. According to the Draft Resolution on VAT reduction, only a 2% reduction in VAT rates will be applied to groups of goods and services currently applying a tax rate of 10% (remaining at 8%).
Thus, the goods and services that are subject to VAT reduction include groups of goods and services currently subject to a tax rate of 10%, which will be reduced to 8%. Groups of goods currently subject to a tax rate of 0% or 5% will be subject to the provisions of the Law on Value Added Tax and will not be subject to VAT reduction.
Note that the VAT reduction regulations do not apply to some groups of goods and services, such as:
These are fields and industries with special characteristics or high importance to the national economy, so they need to be strictly controlled to avoid negative impacts on the economy. VAT reduction is not applied or these items are not eligible for VAT reduction because they are already subject to strong regulation by special consumption tax.
In the period from 2022 to the present, the National Assembly has issued a resolution to implement the policy of reducing the 2% VAT rate for groups of goods and services currently applying a VAT rate of 10% (to 8%), except for some groups of goods and services. Specifically including:
From the Resolution of the National Assembly, the Government has issued many Decrees guiding VAT reduction in recent times, specifically:
Support solutions on taxes, fees, and charges, including VAT reduction, are creating great conditions to help businesses reduce production costs, increase profits, and increase the ability to stimulate demand.
Above is an update of some notable information about the proposal to reduce VAT by 2% in Vietnam in 2025 and 2026. If you have any related questions or need tax law advice, please contact Viet An Law for the best advice and support!
