A majority of members in the National Assembly (NA)’s Finance and Budget Committee agreed with the need to extend the 2 per cent VAT reduction policy in the first half of 2024 to support businesses and people.

Chairman of the committee Lê Quang Mạnh spoke at a meeting during the 15th NA’s ongoing sixth session in Hà Nội on Monday to examine the NA’s draft resolution on the reduction policy.

Based on the assessment of the results achieved by the 2 per cent VAT reduction solution according to Resolution No. 101/2023/QH15 and examination of a draft resolution on VAT reduction, the committee saw the need to continue applying the incentive policy in the first six months of 2024 to support the Government's solutions to implement the 2024 socio-economic development plans, Mạnh said.

At the event, Minister of Finance Hồ Đức Phớc presented a summary report on the NA’s draft resolution on VAT reduction.

According to the report, the legislature last year issued a resolution on fiscal and monetary policies to support the socio-economic recovery and development programme, including a 2 per cent reduction in the VAT for certain goods and services subject to a 10 per cent rate, effective from February 1, 2022 to December 31, 2022.

Amid economic challenges, the NA decided to extend the VAT reduction policy from July 1 to December 31, 2023.

Phớc said from July-October 2023, the policy provided support totalling around VNĐ15.6 trillion (US$650 million) for businesses and individuals, contributing to reducing the prices of goods and services, stimulating production and trade, generating more jobs for workers and boosting consumption demand.

The Government suggested that drastic and effective support measures related to taxes, fees, charges, and land rents that have been issued in 2023 should continue while similar support for 2024 should be considered and proposed, he said.

Specifically, a 2 per cent VAT reduction was proposed for goods and services currently subject to a 10 per cent rate, excluding certain categories such as telecommunications, information technology, financial activities, banking, securities, insurance, real estate business, metals, finished metal products, mining products, coke, refined petroleum, chemical products, and goods and services subject to special consumption tax, applicable from January 1-June 30, 2024.

At the meeting, Phớc also provided explanations about some issues raised by deputies. He said reducing the VAT was one of many measures to stimulate the economy and effective only in the short term. Therefore, it was still necessary to adopt long-term solutions to boost GDP growth. — VNS