Vietnam: Govt’ to slash VAT from 10% to 8% in 2022

  • Following the passing of a VND350tr (approximately USD15bn) economic recovery package, the Government is considering the implementation of a cut to VAT.
  • As part of the stimulus programme, VAT for applicable goods and services will be cut down to 8% in 2022 (down 2% from the current rate), with the reduction set to begin from Feb22.
  • The move has been said to amount to a VND49.4tr (USD2.17bn) tax break for businesses, nearly three times the tax cut they received throughout 2021, according to finance minister Hồ Đức Phớc.
  • Phớc said the Government favoured VAT reduction over income tax reduction because a VAT cut will help all businesses, not just those who reported profit.
  • According to the minister, a majority of firms would be eligible for the VAT cut with the exceptions of firms in the fields of telecommunications, banking and finance, property development, mining and metallurgy, refinery and petrochemicals, among others.
  • Addressing concerns over the efficacy of tax cuts, Phớc said the Government still has to balance its budget and a tax cut greater than 2% would put 2022’s fiscal policy under great pressure.

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