Regarding the need to propose a solution to reduce VAT, Minister of Finance Ho Duc Phoc said that in the 2022-2023 period, the National Assembly has resolved to reduce the VAT rate by 2% for groups of goods and services currently subject to a VAT rate of 10% (to 8%), except for the following groups of goods and services: telecommunications, information technology, financial activities, banking, securities, insurance, real estate business, metals, prefabricated metal products, mining products (excluding coal mining), coke, refined petroleum, chemical products, goods and services subject to special consumption tax in Resolution No. 43/2022/QH15 dated January 11, 2022 on fiscal and monetary policies to support the Socio-economic Recovery and Development Program; Resolution No. 101/2023/QH15 dated June 24, 2023 on the 5th Session of the 15th National Assembly; Resolution No. 110/2023/QH15 dated November 29, 2023 on the 6th Session of the 15th National Assembly.

On April 23, 2024, the Government issued Submission No. 177/TTr-CP and Report No. 178/BC-CP to the National Assembly on the results of the implementation of the 2% reduction in VAT rates according to Resolution No. 110/2023/QH15 dated November 29, 2023 of the National Assembly. In Submission No. 177/TTr-CP, the Government submitted to the National Assembly: Consider and allow the continued implementation of the policy of reducing VAT rates by 2% for a number of groups of goods and services currently applying a VAT rate of 10% in the last 6 months of 2024 (from July 1, 2024 to December 31, 2024) and assign the Government to organize and implement.

The goal is to stimulate consumption, in line with the current economic context, thereby promoting production and business activities to recover and develop soon, contributing back to the state budget as well as the economy to implement the 5-year socio-economic development plan 2021 - 2025, the annual socio-economic development plan, and the economic restructuring plan for the period 2021 - 2025.

Assessing the impact of the draft Resolution on the State budget, Minister Ho Duc Phoc said that the expected reduction in State budget revenue in the last 6 months of 2024 is equivalent to about 24 trillion VND (about 4 trillion VND/month, of which the reduction in domestic revenue is expected to be 2.5 trillion VND/month and the reduction in import revenue is about 1.5 trillion VND/month).

In the first 5 months of 2024, the VAT amount reduced according to Resolution No. 110/2023/QH15 is about 19,488 trillion VND. Except for February with Tet holiday, the average VAT amount in the remaining months at the import stage is reduced by about 1,500 billion VND/month and the domestic stage is expected to be about 2,500 billion VND/month.

Thus, in the first 6 months of 2024, revenue is expected to decrease by about 23,488 trillion VND. If the VAT reduction policy continues to be implemented for the last 6 months of the year, it is expected that revenue will decrease by about 47,488 trillion VND for the whole year of 2024.

Reducing VAT reduces state budget revenue but also stimulates production and promotes business activities, thereby contributing to creating more revenue for the state budget.

The estimated state budget revenue in 2024 is 1,701 trillion VND. Updated to the end of May, according to the State Treasury's report, the actual state budget revenue by May 31, 2024 was 909.3 trillion VND, equal to 53.5% of the estimate and an increase of 15% over the same period in 2023.

State budget revenue was quite good compared to the estimate and the growth compared to the same period reflected the impact of the positive economic recovery, direct revenues from production and business activities (3 economic sectors) reached 54.7% of the estimate, up 14.3% over the same period; land use fee collection continued to improve, although the progress reached 33% of the estimate, it still increased by 92.8% over the same period. In addition, there were some sudden increases in revenue such as the difference in revenue and expenditure of the State Bank paid to the budget 31.84 trillion VND, equal to 175% of the estimate.

To overcome and offset the impacts on the state budget revenue in the short term as well as ensure proactive management of the state budget estimate, the Government will direct the Ministry of Finance to coordinate with relevant ministries, branches and localities to focus on directing the implementation and effective implementation of tax laws; continue to reform and modernize the tax system, simplify tax administrative procedures; resolutely manage state budget revenue, focus on timely and effective implementation of groups of solutions for revenue management, combating revenue loss, transfer pricing, and tax evasion; at the same time, strictly manage state budget expenditures, increase expenditure savings (both investment and regular expenditures), review and cut spending tasks that are not really necessary, and are slow to be implemented after June 30, 2024; proactively use reserves, reserves and other legal resources to spend on prevention and control of natural disasters, epidemics and urgent tasks arising according to regulations, ensure budget balance at all levels, and keep the deficit level within the budget estimate decided by the National Assembly.

Regarding the impact on economic growth, Minister Ho Duc Phoc said that reducing VAT will contribute to reducing costs and selling prices of goods and services, thereby contributing to promoting production and business and maintaining jobs for workers, contributing to stabilizing the macro economy and economic recovery in 2024.

For the people, a 2% reduction in VAT will directly contribute to reducing people's costs in consuming goods and services serving people's lives.

For businesses, a 2% reduction in VAT will contribute to reducing production costs and lowering product prices through businesses that produce and trade goods and provide services that are subject to VAT reduction, leading to a reduction in the selling price of goods and services for consumers, thereby helping businesses increase their competitiveness, increase consumption of goods and services, and expand production and business, contributing to creating more jobs for workers.

Through reviewing relevant international treaties to which Vietnam is a member, the policy contents proposed in the draft Resolution are all consistent with Vietnam's international commitments and are not contrary to the commitments in international treaties to which Vietnam has participated and is a member.

Regarding ensuring resources for implementation, the Government directs the Ministry of Finance to provide specific guidance for the Tax Department and Customs Department of provinces and centrally run cities to organize the implementation of the Resolution. At the same time, to overcome and compensate for short-term impacts on state budget revenue as well as ensure proactive management of state budget estimates, the Government will direct the Ministry of Finance to coordinate with relevant ministries, branches and localities to focus on directing the implementation and effective deployment of solutions.

Discussing at the meeting, the majority of opinions agreed with the draft resolution on reducing value-added tax from July 1, 2024 to the end of this year. Delegates said that the economy is in the process of recovery, there are still many difficulties, so continuing to exempt and reduce value-added tax will create motivation for consumers to spend. At the same time, the recovery trend will be maintained.