Resolution Approval: On November 30, 2024, the 15th National Assembly passed the resolution to extend the VAT reduction, in line with Resolution No. 43/2022/QH15.

Scope of Reduction: The 2% VAT cut applies across importation, manufacturing, processing, and trading. However, key sectors like telecommunications, banking, insurance, real estate, metal production, petroleum, and chemicals remain ineligible.

Compliance Requirements: Businesses must declare the VAT reduction correctly on invoices. If errors occur, both sellers and buyers must adjust their VAT filings accordingly.

Economic Impact:

Since its introduction in January 2024, the VAT cut has supported businesses by lowering costs, boosting domestic consumption, and stabilizing economic growth amid global uncertainties. Analysts report that the policy has helped sustain production, create jobs, and enhance consumer spending.

Financial Considerations:

The tax cut is expected to reduce state budget revenue by VND 26.1 trillion (US$1.03 billion). The government is tasked with balancing fiscal revenues while maintaining economic support.

Strategic Business Insights:

Businesses, particularly in consumer-driven sectors, should leverage this extension for pricing strategies and cost management. Companies are advised to stay updated on legislative developments and ensure compliance with VAT reporting requirements.