Vietnam will cut value-added tax to 8% from 10%

, Vietnam will cut value-added tax to 8% from 10%

The value-added tax (VAT) applies to goods and services used for production, trading, and consumption in Vietnam (including goods and services purchased from non-residents), with certain exemptions.

The country will cut VAT to 8% from 10% from February, as part of the country’s efforts to assist businesses hurt by the coronavirus pandemic, Vietnam News Agency reported.

Related: Tax Accounting Services in Vietnam

The standard VAT rate in Vietnam is 10%. There is a 5% reduced VAT rate on certain foodstuffs and a range of exempt goods and services as well as imports.

  • 0% rate applies to exported goods/services, including goods/services sold to overseas/non-tariff areas and consumed outside Vietnam/in the non-tariff areas, goods processed for export or in-country export (subject to conditions), goods sold to duty free shops, certain exported services, construction and installation carried out for export processing enterprises, aviation, marine, and international transportation services.
  • 5% rate applies generally to areas of the economy concerned with the provision of essential goods and services. These include: clean water, teaching aids, books, unprocessed foodstuffs, medicine and medical equipment, husbandry feed, various agricultural products and services, technical/scientific services, rubber latex, sugar and its by-products, social housing, and certain cultural, artistic, and sport services/products.
  • The 10% ‘standard’ rate applies to activities not specified as not subject to VAT, exempt, or subject to the 0% or 5% rate.

The tax reduction is worth 49.4 trillion dong ($2.17 billion), the report said.

Last week, Vietnamese legislators approved a stimulus package worth nearly 350 trillion dong ($15.4 billion) for the 2022-2023 period.

READ MORE:  Vietnam detects another 39 Chinese nationals illegally enter the country

The Southeast Asian country is targeting gross domestic product expansion of 6.0per cent to 6.5per cent this year, up from last year’s decades-low growth of 2.58per cent. Vietnam’s annual GDP growth averaged 6.55per cent over the five years prior to the pandemic.

The latest stimulus package includes measures to reduce value-added tax by 2.0 percentage points, cut loan interest rates by 0.5-1.0 percentage points and increase infrastructure investment.

(vitag.Init = window.vitag.Init || []).push(function () { viAPItag.display(“vi_682621617”) })

The package also includes funds for the healthcare system and financial support to cut house rents for workers.

News related