Customers shop at a supermarket in HCM City. (Photo: VNA)

In its recent submission to the National Assembly, the Government assessed that the VAT reduction from 10% to 8% is being implemented according to Resolution No. 110/2023/QH15, from January 1 to June 30, 2024.

It has helped decrease input cost pressure for businesses and stimulate consumption, creating a driving force for economic growth.

This has supported companies and people to stabilise production and business and improve living standards, contributed to macro-economic stability and also created favourable conditions to promote economic recovery and growth post COVID-19.

The Government believes that by the end of this year, the world and regional situation will continue to evolve rapidly and complicatedly, and be difficult to forecast. The recovery of Vietnam's major trading partners is still slow and there is a risk of disruption in global supply and value chains.

Continuing the VAT reduction for some groups of goods and services until December 31, 2024 is one of the important solutions to support for the people and businesses.

Bui Thu Nguyet, a resident in Hanoi’s Nam Tu Liem district, said that from 2023 until now, the reduction of VAT to 8% on many goods items has made her save expenditure for shopping at supermarkets.

The tax incentive reduced the Government revenues by 25 trillion VND (nearly 994.7 million USD) in the first six months of this year, according to the Ministry of Finance.

With the 2% tax cut in the second half of the year, the State budget will be slashed by some 24 trillion VND, or around 4 trillion VND per month.

Minister of Finance Ho Duc Phoc said this proposal on extending the VAT cut until the year end is hoped to be approved at the National Assembly meeting that will open on May 20.

Economist Le Dang Doanh said this policy will directly impact people and stimulate consumption. This has great significance, because along with investment and export, the domestic consumption is one of three important driving forces to promote economic growth.

According to Doanh, the reduced amount at each invoice will stimulate people to buy goods and services. So, production and business activities of enterprises have recovered and grown strongly, and people have also benefited from having more jobs.

Besides that, the enterprises' input costs will also decrease due to the lower VAT, thereby production costs will be lower.

Mac Quoc Anh, deputy chairman of the Hanoi Association of Small and Medium Enterprises, also supports the policy of continuing to reduce VAT.

He said the tax cut will help reduce goods and service prices, stimulating the domestic consumption, and promoting production.

Le Nguyen Minh Tuan, general director of Move New City JSC, told the Nguoi lao dong (Workers) newspaper, that in the context of low car consumption due to economic difficulties, the automobile industry really needs support from tax and fee policies.

The automobile industry currently only enjoys VAT reduction incentives on some components and services and is hoping for reductions in more categories, making car prices lower./.