Government of Vietnam approves request for development of project on Resolution of National Assembly of Vietnam on VAT reduction

Government of Vietnam approves request for development of project on Resolution of National Assembly of Vietnam on VAT reduction

According to the Resolution, the Government of Vietnam, in consideration of the request of the Minister of Finance of Vietnam in Statement No. 228/TTr-BTC dated October 31, 2023 and based on the voting results of its members, decides to: 

- Approve the request for the development of the project on the Resolution of the National Assembly of Vietnam on VAT reduction as the request of the Ministry of Finance of Vietnam in Statement No. 228/BTC-CST mentioned above. The Ministry of Finance of Vietnam shall receive opinions from members of the Government of Vietnam during the development and completion of the project on the Resolution of the National Assembly of Vietnam according to regulations and take responsibility for the reported and proposed content and data.

- Assign the Minister of Justice of Vietnam to, on behalf of the Prime Minister of Vietnam, represent the Government of Vietnam to sign the Statement of the Government of Vietnam to report to the National Assembly of Vietnam and its Standing Committee before 8 p.m. November 1, 2023 on the addition of the project on the Resolution of the National Assembly of Vietnam on VAT reduction to the Program on the Development of Laws and Ordinances 2023 and permit the development of the Draft Resolution according to the simplified procedures for appeal to the National Assembly of Vietnam for approval according to the procedure of a meeting session of the National Assembly (6th meeting).

The Ministry of Finance of Vietnam shall strictly cooperate with the Ministry of Justice of Vietnam and adequately provide related documents to the Ministry of Justice of Vietnam according to regulations, ensuring the progress of reports to agencies of the National Assembly of Vietnam according to requests.

Impacts of VAT reduction on state budget revenues

According to Official Dispatch No. 11239/BTC-CST 2023, the impacts of the VAT reduction on state budget revenues are as follows:

The implementation of the policy on 2% VAT reduction in the first 6 months of 2024 is expected to reduce state budget revenues by approximately 25 trillion VND (around 4,175 trillion VND/month), specifically, 2.700 billion for domestic revenues and 1.475 billion VND for revenues from import).

The above figure is calculated based on the expected reduction of domestic revenues of the state budget in the last 6 months of 2023 (2.550 billion VND/month on average), assuming that the GDP growth rate in 2024 is around 6-6,5% and the state budget revenue growth rate in 2024 is around 5.7%

To overcome and offset the impacts on state budget revenues in the short term as well as to ensure proactivity in the administration of state budget estimates, the Ministry of Finance of Vietnam will cooperate with concerned Ministries, central authorities, and local authorities in focusing on directing the effective implementation of Tax Laws; continue to reform and modernize the tax system, simplify administrative procedures for tax while drastically manage state budget revenues and focusing on the timely and effective implementation of measures to manage revenues and prevent losses, transfer pricing, and tax evasion.

See more details in Resolution No. 179/NQ-CP 2023, effective as of November 1, 2023.

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