Vietnam Chamber of Commerce and Industry (VCCI) has just commented to the Ministry of Finance on reducing value-added tax in the first 6 months of 2024.

According to the draft, a 2% reduction in value-added tax (VAT) is expected to apply to a group of goods and services currently subject to a 10% tax rate. Some groups of goods and services excluded from VAT reduction include telecommunications, information technology, financial activities, banking, securities, insurance, real estate business, metal production and manufacture of fabricated metal products, mining industry (excluding coal mining), coke production, refined petroleum, chemical products production, goods and services subject to special consumption tax.

VCCI assesses that extending the 2% VAT reduction to the first half of 2024 is necessary, helping businesses regain growth momentum and create jobs. Currently, Vietnam's economic situation is still facing many difficulties and this situation is expected to continue in the first half of next year.

However, VCCI's records also show that businesses have encountered many problems when applying the VAT reduction policy. The main reason is from classifying which goods are subject to 10% tax and which goods are reduced to 8%.

VCCI said that the Government has issued decrees to guide implementation, but in reality, the classification of goods and services into different tax rates is still confusing.

Some businesses reported that, despite searching, they still did not dare to confirm whether their goods and services were subject to the 10% or 8% tax rate. Some businesses ask the tax and customs authorities, but these units do not dare to confirm for the business for fear of being wrong. Some other businesses have had to hire additional accountants to adjust invoices and books to comply with the new tax rates.

"There are businesses that have agreed with customers on quantity, quality, and price but cannot agree on the tax rate of 8% or 10%, so the contract cannot be signed," VCCI said.

Therefore, to facilitate businesses, VCCI requested the drafting agency to consider a plan to reduce value-added tax for all goods and services from 10% to 8%.

Previously, on October 24, the Vietnam Banking Association also proposed adding banks to the group receiving a 2% VAT reduction to create conditions for credit institutions to have more resources to support businesses and invest in digital transformation technology.

According to this Association, the operations of credit institutions are currently facing difficulties, bad debts and potentially risky debts tend to increase. The operating results of credit institutions in 2023 and 2024 are forecast to decline sharply compared to previous years, especially small credit institutions. Meanwhile, these units still have to implement interest rate support programs and service fee exemptions and reductions for businesses and people.