Necessary Tax Reductions Need to Be Equitable and Beneficial
Rewritten Article:
Let's dive into Vietnam's world of economic innovation! The Ministry of Finance's latest proposals are aiming high, focusing on extending two major tax relief policies to propel growth and secure jobs. They're presenting their game plan to the National Assembly on May 13.
Say goodbye to those high value-added tax (VAT) bills for a while longer! The proposed resolutions suggest extending the VAT cut and nixing the agricultural land-use tax exemption until 2030.
But what's the big deal with these tax cuts, you ask? Well, think of it as a powerful boost for your wallet and the economy.
Starting July 1, 2025, and lasting until the end of 2026, many goods and services currently subject to a 10% VAT rate will see a 2% reduction. You can bet your bottom dollar that this cut will make a difference for businesses and consumers alike!
And if you're in the telecom, finance, insurance, or luxury goods industry, don't fret – you're still gonna have to pay up. But, the Ministry of Finance has got some exciting additions in mind, like expanding eligibility to categories such as IT services, prefabricated metal products, fuels, technology products, and more.
These strategic tax cuts are more than just a Band-Aid for temporary relief – they're here to stimulate domestic demand, lower production costs, and beef up the resilience of enterprises struggling with global instability and sluggish external markets. With consumer spending taking a dive and exports facing headwinds, fiscal measures like VAT cuts are just what the doctor ordered to maintain growth momentum.
Deputy Minister of Finance Cao Anh Tuàn predicts a revenue loss of around VNĐ121.7 trillion (approximately US$4.8 billion) over 18 months. But don't worry about the long-term impact – lower prices are expected to fuel consumption, production gains, and job creation. The benefits will feed back into a stronger economic output and a stabler fiscal base in the long run.
The VAT reduction has been slashed five times since 2022, and it's no secret that it's helped businesses weather economic storms. It's got the private sector on its feet and contributing to a healthy mere 0.0057% of the State budget in the form of agricultural land-use tax.
But hold on to your horses – agriculture's not forgotten! The Ministry of Finance is also proposing an extension of the agricultural land-use tax exemption until 2030. Despite the minimal revenue brought in by this tax, it's been a critical tool in supporting farmers, preserving rural livelihoods, and promoting sustainable agricultural development since 1993.
Minister of Finance Nguyễn Văn Thắng highlights that the estimated yearly tax exemption of VNĐ7.5 trillion won't impose any financial burden on the budget because the policy is already in effect. Some policymakers, however, argue that the exemption should be more targeted.
Deputy Chairman of the NA Lê Minh Hoan points out that, in some rural areas, farmland sits idle despite tax relief. He suggests focusing the exemption on active producers and ramping up oversight to prevent inefficient land use and land hoarding.
Hoan emphasizes the importance of aligning tax incentives with Vietnam’s goal of sustainable agricultural transformation. As we navigate the intricate global landscape, fiscal support through targeted tax cuts remains a crucial pillar in safeguarding our economic gains and supporting job security. Stay tuned – policymakers are working tirelessly to ensure we've got the tools needed to succeed when we need them most! - VNS
Inside a workshop of a furniture-making business in Hà Nội. - VNA/VNS Photo Vũ Sinh
Insights:- The VAT reduction has been implemented five times since 2022 to support businesses and the private sector.- The VAT reduction is expected to enable the private sector to thrive, thus "nurturing future revenue" for the State.- The agricultural land-use tax exemption has been in place since 1993 and is often considered a critical tool to support farmers, protect rural livelihoods, and promote sustainable agricultural development.- Some policymakers argue that the agricultural land-use tax exemption should be more targeted to active producers.
- The proposed tax relief policies by the Ministry of Finance aim to propel economic growth, secure jobs, and boost the wallets of both consumers and businesses.
- Goods and services in various industries, such as IT services, prefabricated metal products, fuels, technology products, will become more eligible for the strategic VAT cuts.
- These tax cuts are designed to stimulate domestic demand, lower production costs, and enhance the resilience of enterprises dealing with global instability and sluggish markets.
- The VAT reduction has played a significant role in helping businesses weather economic storms and contribute minimally to the State budget.
- The agricultural land-use tax exemption, a critical tool for supporting farmers and promoting sustainable agricultural development since 1993, is also being proposed for extension until 2030.
- Targeted adjustments to the agricultural land-use tax exemption policy are being discussed, with a focus on active producers and efficient land use to prevent waste and hoarding.
- Policymakers are working diligently to ensure that fiscal measures like targeted tax cuts remain a key tool in safeguarding economic gains, job security, and sustainable agricultural transformation in Vietnam.
