The Vietnam Chamber of Commerce and Industry (VCCI) has proposed that the Ministry of Finance (MoF) consider applying a 2 per cent reduction on the VAT rate in the first half of 2024 to all types of products and services.

The MoF recently proposed that the Prime Minister continue a 2 per cent reduction on VAT for products and services subject to a 10 per cent rate into the first half of 2024.

Exceptions cover 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.

However, the VCCI said enterprises face many difficulties in applying the policy, mainly due to the classification of products subject to a 10 per cent rate or those have had their rate reduced by 2 per cent to 8 per cent.

The Vietnam Banking Association has also proposed that the MoF add the banking sector to the group of products and services subject to the tax reduction, to help credit institutions gain more resources to support businesses and invest in digital transformation while ensuring operational security and safety.

According to the MoF, the proposed reduction, if applied into the first half of 2024, would cost the State budget an estimated VND25 trillion ($1 billion).