The Ministry of Finance (MoF) has sought feedback from ministries and agencies on a draft resolution from the National Assembly (NA) on value added tax (VAT) reductions.

Under the draft, the MoF proposes a cut of 2 per cent on all goods and services subject to the existing 10 per cent VAT rate.

The option is aimed at promoting consumption in line with current economic circumstances, helping accelerate production and trade activities to contribute to the State budget and the economy, according to the MoF.

If the policy is applied over the last six months of this year, State budget collections are estimated to fall by some VND35 trillion ($1.48 billion).

Earlier, MoF proposed two options regarding VAT reductions. In the first, the current 10 per cent rate on a number of goods and services would come down to 8 per cent.

Under the second, the VAT would be reduced by 2 per cent from the current 10 per cent but exclude goods and services already affected by previous VAT reductions as part of government policy to boost post-pandemic economic recovery.

Last year, from February 1 to December 31, VAT was cut from 10 per cent to 8 per cent for most goods and services under Decree No. 15 from the government. The reduction helped promote consumption demand and boost production and trade.