HÀ NỘI — The Ministry of Finance has proposed extending two major tax relief policies – a 2 percentage point cut in value-added tax (VAT) and a continued exemption on agricultural land-use tax – arguing they are urgently needed to support economic growth, protect jobs and ease the financial strain on households and enterprises.

The draft resolutions will be presented to the National Assembly (NA) today, during its ninth session. If approved, the VAT cut would be extended until the end of 2026, while the land tax exemption would remain in place through 2030.

According to the ministry, the VAT cut would apply from July 1, 2025, to December 31, 2026, for goods and services currently taxed at 10 per cent. Sectors such as telecommunications, finance, insurance, securities and certain luxury goods would remain excluded. However, the ministry proposes to widen the list of eligible products to include essential raw materials such as fuel, technology products, refined petroleum, fertilisers, chemicals, plastics and metals.

Officials emphasise that the proposed tax breaks are more than just temporary relief. They are intended as strategic tools to stimulate domestic demand, reduce production costs and bolster the resilience of enterprises grappling with global uncertainty and slower external markets. With consumer spending under pressure and exports facing headwinds, fiscal measures like VAT cuts are viewed as vital levers to maintain growth momentum.

Deputy Minister of Finance Cao Anh Tuấn said the proposal would result in a projected revenue loss of VNĐ121.7 trillion (around US$4.8 billion) over 18 months. However, he noted that the overall impact would be positive for the economy, with lower prices fuelling consumption, production gains and job creation. He added that these benefits would feed back into higher economic output and a more stable fiscal base in the long run.

The VAT reduction has been implemented five times since 2022 and is widely seen as having helped businesses weather economic shocks. It has supported domestic demand and contributed to keeping production lines running. Nguyễn Thị Cúc, chairwoman of the Việt Nam Tax Consultants’ Association, said continued VAT relief would not only support growth but also help the State “nurture future revenue” by enabling the private sector to thrive.

In parallel, the ministry has also put forward a proposal to continue the exemption of agricultural land-use tax until 2030. While the revenue from this tax is minimal – accounting for just 0.0057 per cent of the State budget – it has long been considered a critical tool to support farmers, protect rural livelihoods and promote sustainable agricultural development. The exemption policy has been in place since 1993 and has received strong support from local governments for its role in encouraging land use and food production.

Minister of Finance Nguyễn Văn Thắng said the estimated tax exemption of VNĐ7.5 trillion per year would not create any new burden on the budget, as the policy is already in effect. However, some policymakers argue the exemption should be more targeted.

Deputy Chairman of the NA Lê Minh Hoan noted that in some rural areas, farmland continues to lie idle despite the tax relief. He suggested the exemption should focus on active producers and be paired with stronger oversight to prevent wasteful land use.

Hoan called on the Ministry of Finance to coordinate with relevant ministries to refine the policy framework, ensuring it supports genuine producers while discouraging land hoarding or inefficient usage. He stressed the importance of aligning tax incentives with the country’s broader goal of sustainable agricultural transformation.

As Việt Nam looks to safeguard its economic gains and navigate an increasingly complex global environment, fiscal support through targeted tax cuts remains a key pillar. For policymakers, the challenge now is to act swiftly and decisively to ensure those tools are in place when they are needed most. — VNS