From now until the end of the year, value-added tax (VAT) will be reduced by 2% from 10% to 8% for many items. Reducing value-added tax will reduce the cost of goods and services, stimulating consumption demand, promoting production and business and creating more jobs for workers.

The Government has issued Decree 44 stipulating the policy of reducing value-added tax (VAT) according to the Resolution of the National Assembly. Accordingly, from now until the end of the year, value-added tax (VAT) will be reduced by 2% from 10% to 8% for many items. Reducing value-added tax will reduce the cost of goods and services, stimulating consumption demand, promoting production and business and creating more jobs for workers.

Reducing VAT by 2% will impact the entire market, contributing to macroeconomic stability and economic recovery in 2023. This is also one of the policies evaluated by economic experts widely; the first audience to benefit from this policy is the consumer.

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Ms. Nguyen Hien living in Hanoi, said: "Reducing VAT from 10% to 8% also helps consumers like us reduce a part of the cost. I spend this money to buy more food and goods; although it is not a large amount, it also helps us a lot in the difficult economic context."

Immediately after the VAT reduction policy took effect, many stores, supermarkets... have applied discount programs. Information from the Union of Commercial Cooperatives of Ho Chi Minh City (Saigon Co.op), this unit has implemented discounts for thousands of products for the entire retail system with 800 points of sale nationwide. Accordingly, 5 categories of goods, including goods, fresh food, technology food, fashion apparel and household appliances, all reduced prices; the average price reduction was from 22% to 62%, including regular discounts and a 2% VAT reduction.

According to Mr. Le Van Liem - Northern Regional Director, Ho Chi Minh City Union of Trade Cooperatives (Saigon Co.op), this is the second time that VAT has been reduced by 2%, which has a direct effect on helping Consumers shop for savings and help stimulate reinvestment in production and business.

"Saigon Co.op also adjusts product prices. Second, we also carry out many promotional programs to accompany consumers; consumers feel that the State and the Government actively support consumer prices. This is a common effect; the sales volume and business revenue will increase," said Mr. Liem.

Value-added tax is an indirect tax included in the selling price of products, goods and services. Therefore, when the tax is reduced, the prices of goods and services will decrease, helping stimulate consumer demand and businesses to recover production. According to calculations by the Ministry of Finance, reducing value-added tax by 2% for some groups of goods and services will cause a deficit in state budget revenue of about VND 24,000 billion, but this policy is necessary to stimulate demand and promote economic development.

Assoc.Prof.Dr. Dinh Trong Thinh, a Senior Lecturer at the Academy of Finance, an economist, said: "With the reduction of VAT from 10% to 8%, the price of goods on the market can be reduced from 1.5 to 1, 7% and create conditions for businesses to have peace of mind with their production and business activities. For this tax reduction to be implemented, businesses must actively prepare conditions.

This is also a relatively difficult job, but we have experience before reducing the tax from VAT from 10% to 8%, so most businesses do it completely very quickly and can be applied immediately. State management agencies must grasp the discounting situation to check and monitor price reduction activities so prices decrease. The more important thing is to support businesses, then the tax reduction in real life is both fast and effective."

In 2022, the implementation of value-added tax reduction has indirectly stimulated domestic consumption demand; the total retail sales of consumer goods and services in 2022 will increase by 19.8% over the previous year; domestic growth did not decrease but increased by 10% over the same period.

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