Vietnam plans to extend VAT cut until end-June 2024: govt

By Reuters October 17, 2023 | 09:09 pm PT

People ride an escalator at a supermarket in Hanoi, January 2023. Photo by VnExpress/Ngoc Thanh

The Vietnamese government said on Tuesday it plans to extend a reduction in value added tax (VAT) until the end of June next year to boost domestic consumption and production as the global economy remains sluggish.

The cut in VAT to 8% from 10%, which still needs parliament's approval, has been in place since July and is set to expire by the end of this year. The next session of parliament is scheduled to begin next week.

The 8% VAT rate is not applicable to services and products like banking, finance, telecommunications and real estate, the government said in a statement.

The tax cut, which is expected to boost domestic consumption, would reduce the government's budget revenue by 25 trillion dong ($1.02 billion), the statement added.

Vietnam's economic growth rose 5.33% in the third quarter, higher than 4.05% in the previous one, official data showed.

Headline inflation continued the sharp upward increase that started in June, official data showed. September's consumer price index rose 3.7% in September against the same period last year.

While economic growth picked up in the July-September period thanks to a gradual recovery in exports, domestic consumption remained subdued and credit growth continued to be slow reflecting weak private domestic investment and investor confidence, the World Bank said in its latest report.

Retail sales in the domestic market with a population of nearly 100 million, rose 9.7% in the first nine months of this year from a year earlier, according to the General Statistics Office.