From the beginning of February, VAT is expected to decrease to 8%, which may reduce state budget revenue by more than 49,000 billion VND this year.
The Ministry of Finance is collecting comments on a draft Decree detailing policies on tax exemption and reduction, according to Resolution 43 of the National Assembly on the program on socio-economic development recovery.
The draft stipulates two contents: reducing value-added tax (VAT) and allowing businesses to include expenses to support and finance epidemic prevention and control activities in Vietnam into deductible expenses when determining income subject to corporate income tax.
Specifically, groups of goods and services that are applying the 10% VAT rate will be reduced by 2% in 2022, down to 8%. The regulation is expected to take effect from February 1, this year.
The VAT reduction will deduct the following groups of goods and services: telecommunications, information technology, financial activities, banking, securities, insurance, real estate business, metal production and products Manufacture of prefabricated metal products, mining (excluding coal), production of coke, refined petroleum, manufacture of chemicals and chemical products, taxable products and services Special Consumption.
According to the Ministry of Finance, the VAT reduction policy makes the state budget able to reduce the revenue of 2022 by about 49,400 billion VND. The policy of deducting expenses related to support for epidemic prevention and control also reduced budget revenue by 2,000 billion VND.
In order to overcome and offset the short-term budget impacts as well as be proactive in budget estimates, the Ministry of Finance said that it will coordinate with ministries, sectors and localities to focus on effective implementation of the Tax Law, continue to modernize the tax system reform, simplify administrative procedures, drastically reduce revenue management, combat loss of revenue, transfer pricing to evade taxes…