Shoppers at a commercial centre in downtown Hanoi. VNA/VNS Photo

 

The current VAT reduction, from 10 per cent to 8 per cent, has been having a positive impact on Việt Nam’s economy. Given the ongoing economic difficulties it’s essential to continue with the tax cut, at least during the first six months of 2025, said the Vietnam Chamber of Commerce and Industry (VCCI).

 

The tax cut, introduced to give the economy a boost amid the COVID-19 pandemic and due to end December 31, is up for review by the National Assembly, which has requested opinions and feedback on its continuation.

 

The chamber also voiced its concerns over the current implementation of the tax cut.

 

"We have noted that many businesses are facing considerable obstacles in qualifying for the tax cut, mainly due to the tax authority’s categorising method that determines which goods and services are eligible,” said the VCCI in an official statement.

 

Despite several governmental decrees issued, including Decree 15/2022/ND-CP, Decree 44/2023/ND-CP and Decree 72/2024/ND-CP, implantation remained systematically problematic. The chamber suggested the country’s economic classification system, historically used to gather data, could serve poorly as a basis for determining the rights and obligations of goods and services.

 

In certain areas, the lack of legal frameworks could make it extremely difficult to categorise a group of goods and services. For example, it’s challenging to categorise telecommunications and IT products due to a lack of definitions in Vietnam’s existing legal documents. Similar issues are also present in several manufacturing and chemical sectors, which suffer the same difficulties.

 

The chamber said businesses, on many occasions, were held back because they couldn’t make sure whether their goods and services may qualify under the tax cut. Even seeking clarification from the tax authority was no help as they were told to refer to the national product sector classification system and other decrees.

 

There are costs to the public and the economy because of all these difficulties in determining whether a good or a product could qualify for the tax cut, said the VCCI.

 

In addition, businesses have to pay more to hire additional accounting staff to adjust invoices and financial records. They face increased risks in finalising purchase agreements due to difficulties in calculating the VAT tax, even after all other details were negotiated successfully. In some cases, disputes and settlement requests have been filed over disagreements on the VAT tax.

 

Given the current economic context and difficulties, the chamber has proposed the National Assembly consider reducing the VAT tax for all goods and services from 10 per cent to 8 per cent. VNS

 

Read original article here