Tiếng Việt
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The 15th National Assembly of Vietnam has officially passed a resolution to continue applying a 2% reduction in value-added tax (VAT), lowering the rate from 10% to 8% for certain groups of goods and services. This policy will take effect from July 1, 2025, and remain in force until December 31, 2026. It is a continuation of fiscal support measures aimed at post-pandemic economic recovery, particularly in light of still-weak domestic demand compared to potential.
According to the resolution, the VAT reduction does not apply to sectors such as finance, banking, insurance, securities, telecommunications, real estate, products subject to special consumption tax, and certain heavy industries like metallurgy and mining (excluding coal). Conversely, the scope of beneficiaries has been expanded to include key sectors such as transportation, logistics, information technology, accommodation and food services, commerce, and several consumer service industries.
The policy is projected to reduce state budget revenue by approximately VND 121 trillion over the entire period, including about VND 39 trillion in the second half of 2025 and over VND 82 trillion in 2026. However, its positive impact on aggregate demand, production, and business recovery is expected to generate broader spillover effects, thereby stimulating GDP growth and indirectly increasing revenue from other taxes.
From a legal perspective, the extension of the VAT reduction through the end of 2026 reflects a flexible, proactive, and forward-looking fiscal management approach. The policy is issued in the form of a National Assembly resolution, grounded in the current Law on Value-Added Tax and supported by the Government’s impact assessment reports. This ensures that the policy is implemented consistently, transparently, and under close supervision.
For businesses, accurately identifying goods and services eligible for the 8% VAT rate is essential to ensure proper tax declarations and avoid future back-tax assessments. It is also important to distinguish between input and output goods, as not all inputs may benefit from a corresponding tax reduction. While local tax authorities are responsible for inspection, guidance, and clarification, enterprises must remain proactive in reviewing and maintaining complete documentation.
From a regulatory standpoint, timely issuance of detailed guidance on the scope of application, accounting methods, and invoice adjustments for transactions during the transitional period is essential for effective implementation. In parallel, strengthening inspection efforts and leveraging IT solutions in e-invoice and VAT management are key measures to monitor compliance and prevent revenue loss.
Overall, the additional 2% VAT reduction through the end of 2026 stands as one of Vietnam’s core fiscal policies during the recovery and acceleration phase post-pandemic. From a tax law consultancy standpoint, the policy is well-structured, aligns with national budgetary principles, and offers appropriate incentives. The critical factor lies in unified awareness and coordinated implementation by both businesses and regulatory authorities to maximize the policy’s effectiveness in practice.
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