Government set to extend VAT cut until mid-2024

The government instructed it at a meeting Thursday to submit the proposal by Saturday to extend the VAT cut for six more months from its original expiry date of December 31 this year.

It is meant to support businesses but also consumers.

According to the government's assessment, the economy is stable and inflation is under control.

Growth in the first nine months was 4.24%, and 5.33% in the third quarter.

This places Vietnam among the fastest growing economies globally.

However, there are still challenges due to complex and unpredictable global developments.

The government identifies investment, exports and consumption as the three drivers of the economy.

The National Assembly had approved in June a 2 percentage point cut in VAT during the second half of 2023 except for some sectors like real estate and banking.

Other sectors not covered by the reduced tax, which took effect on July 1, include telecommunications, information technology, finance, securities, insurance, metal products, mining products, refined petroleum, chemical products and items subject to special consumption tax.

At a Government meeting on September 30, Minister of Planning and Investment Nguyen Chi Dung recommended extending the tax cut until mid-2024 saying the economy continued to face difficulties.

The cut would not only put more money in consumers’ pockets but also have a psychological impact that would stimulate demand and increase consumption, he said.