Real estate, securities, insurance businesses not subject to VAT cut proposal

Real estate, securities, insurance businesses are not subject to the Government's proposal for value-added tax reduction.
Minister of Finance Ho Duc Phoc

Minister of Finance Ho Duc Phoc

This afternoon, the National Assembly heard reports on the continuation of the policy of 2 percent reduction in the value added tax (VAT) under Decree No. 43/2022/QH15 dated January 11, 2022.

According to the Government's report presented by Minister of Finance Ho Duc Phoc, solutions to support businesses and people in taxes, fees in general and VAT reduction in particular have been highly appreciated by the business community and people as they have been contributing to positive results in the recovery and development of businesses and the country’s economy.

Therefore, in 2023, the Government continued proposing to continue implementing the 2-percent VAT reduction policy specified at Point a, Clause 1.1, Article 3 in the Resolution No. 43/2022/QH15 on supportive monetary policy and program on socio-economic recovery and development from July 1, 2023 to the end of December 31, 2023.

It is expected that if the VAT reduction is applied for those mentioned in the Resolution 43 in the last six months of this year, the State budget revenue will reduce by about VND24 trillion and the state budget revenue in 2023 is expected to decrease by VND20 trillion, because the VAT revenue of December 2023 will be paid in January 2024.

The government affirms that people are the beneficiaries of this policy, because VAT reduction will contribute to decrease in the cost of goods and services; thereby, directly cutting people's spending on goods and services as well as promoting production and business and creating more jobs for employees for the country’s macroeconomic stability and economic recovery in 2023.

Chairman of the NA’s Finance-Budget Committee Le Quang Manh

Chairman of the NA’s Finance-Budget Committee Le Quang Manh

Majority of legislators of the Finance - Budget Committee agreed that the VAT reduction policy will be applicable from July 1, 2023 to the end of December 31, 2023.

However, some legislators argued that the implementation of the policy in the last 6 months of 2023 may not be enough time for the policy to take effect, making it difficult for the policy to achieve the set goals. Therefore, the session participants recommended to consider extending the policy application time compared to the Government's proposal to ensure stability, initiative in implementation and enough time for the policy to be effective.

Regarding the scope of application, most legislators in the verification agency agreed to continue implementing the policy of 2-percent VAT reduction as prescribed in the National Assembly’s Resolution No. 43/2022/QH15 as proposed by the Government.

However, some legislators suggested the Government evaluating carefully the impact of tax reduction while others suggest consideration of continued VAT reduction policy implementation at present because of concerns about the effectiveness of the policy and concerns about the impact of revenue reduction in the context of revenue collection tasks in 2023 is quite difficult. This may cause a negative impact on the implementation of the 2023 state budget estimate approved by the National Assembly.

The Government's assessment report also has not specifically evaluated the expected impacts of the policy on the ability to stimulate consumption demand and promote production and business activities in the second half of 2023 as the set target.

Also, some suggested serious consideration to expansion of those eligible for VAT reduction in applying the tax rate of 8 percent to all groups of goods currently suffering the 10 percent tax rate according to the provisions of the Law on VAT because currently, businesses in all fields are facing difficulties. There are also suggestions to consider reducing VAT to 4 percent for nurturing businesses.

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