National Assembly to cut at least 2 per cent of VAT for certain goods and services

The NA is to cut at least 2 per cent of VAT for certain goods and services

The decrease in VAT will not be applied for goods and services in telecommunication, IT, finance, banking, stocks, insurance, real estate trading, and for goods with special consumption taxes.

The decision took effect on January 11 and expires on December 31.

Previously, the government proposed to cut by 2 per cent of VAT to stimulate the economy.

“The pandemic did not just cause short-term impacts but also affected the long-term economic plans of the next 5-10 years. Without appropriate solutions to support the economy, the average economic growth rate of the period would reach only 5.4 per cent a year, much lower than the target,” the government stated.

Therefore, the government drew up the scheme on fiscal and monetary policies to support the programme for socioeconomic recovery and submitted it to the NA for review.

The scheme comprises five major groups of targets and solutions, including reopening the economy while ensuring pandemic prevention and control; improving the healthcare capacity; social security and job support; facilitating the recovery of enterprises, cooperatives, and household businesses; infrastructure development; administrative reforms, and improvement of the business environment.

In accordance with the package, the environmental protection tax on aviation fuel would be cut by half and VAT would be reduced from 10 per cent to 8 per cent on certain goods and services.