Tuesday , September 26 2023

Vietnam to impose value-added tax waiver from February

Vietnam will cut its value-added tax by 2 percentage points to 8 percent starting Feb. 1 to boost recovery after two years of Covid-19 impacts.

The tax break will last until the end of other year, according to a government decree issued Friday.

Some sectors that will not be eligible for the tax break are communications, information and technology, finance, banking, securities, insurance and real estate, which have not been affected by the pandemic.

The tax break is set to reduce government revenue by VND49.4 trillion ($2.18 billion).

The reduced VAT is part of the VND350 trillion stimulus package that lawmakers approved earlier this month to revive the economy.

The proposed 3 percent tax waivers and deferrals for businesses and 2 percent cut in value-added tax would help encourage consumption, and this could help the country bounce back from the “massive shock” of the third quarter last year, said Dorsati Madani, senior economist, World Bank Vietnam.

The bank forecasts Vietnam’s GDP growth this year at 5.5 percent, against the country’s target of 6-6.5 percent.

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