The Government has proposed a 2 per cent reduction on value-added tax (VAT) rates for specific groups of goods and services in the first half of 2025 to support business and production.

Deputy Prime Minister and Minister of Finance Ho Duc Phoc submitted the draft resolution on the rate cut to the National Assembly on November 28.

Under the proposal, the 2 per cent reduction will be applicable to products and services subject to a 10 per cent rate, with exceptions for three groups of products and services: Group 1: telecommunications, financial activities, banking, securities, insurance, real estate business, metals and prefabricated products, mining products (excluding coal mining), coke coal, refined petroleum, and chemical products; Group 2: goods and services subject to special consumption taxes; and Group 3: information technology under information technology laws.

If the policy is applied in the first half of 2025, it would result in a deficit of an estimated VND26.1 trillion (over $1.02 billion) in the State budget.

Total VAT reductions this year are estimated at VND49 trillion ($1.92 billion).