Applied from February 1 to the end of December 31, 2022, the Vietnamese government's Decree No. 15/2022/ND-CP dated January 28, 2022 stipulates tax exemption and reduction policies according to Resolution No. 43/ 2022/QH15 adopted by the National Assembly on fiscal and monetary policies to support the socio-economic recovery and development programme. Notably, the reduction of the value-added tax rate (VAT) from 10% to 8% in 2022 for applicable goods and services helps stimulate shopping demand and promote production and business activities.

Many supermarkets in Da Nang have applied the VAT reduction from 10% to 8% right after the traditional Lunar New Year 2022. Photo: KHANH HOA.

Of special note, the VAT cut is not applied to goods and services in the fields of telecommunications, information technology, finance and banking, insurance, stock trading, real estate business, metal production and mining industries (except coal), petroleum, chemicals, and commodities and services that are subject to the special consumption tax.

Market surveys in recent days show that many supermarkets and businesses have simultaneously applied the new VAT reduction and notified customers of this encouraging sign.
Co.opmart Son Tra supermarket based in Son Tra District has officially applied the adjustment of VAT reduction from 10% to 8% from February 6.

Ms. Nguyen Thi Bich Dao, chief accountant of Co.opmart Son Tra supermarket, said that the items eligible for the VAT reduction to 8% are more than 10,000 essential products, accounting for more than 75% of the total proportion of consumers' shopping at the supermarket, mainly fresh food, fashion and garment products and some household appliances.

“With the application of the VAT reduction, consumers are entitled to a 2% discount on the total payment price when making a purchase. When customers shop at the Co.opmart Son Tra supermarket, the VAT discount will be available in the invoice according to regulations”, said Ms. Dao.

Meanwhile, like consumers, many transportation service businesses are very excited when this tax reduction policy officially takes effect.

Mr. To Van Hiep, Director of the Lien Chieu Xanh Logistics Joint Stock Company, Chairman of the Da Nang Road Cargo Association, said that although the 2% reduction is not too large for each purchase, but adding up orders from many times of purchasing raw materials, businesses also put aside a substantial amount of money to cover other expenses. This contributes to supporting businesses and consumers to overcome difficulties amidst the negative impacts of the COVID-19 pandemic”, said Mr. Hiep.

The VAT reduction is expected to stimulate consumption demand, promote the production and circulation of goods in 2022. Local consumers are seen shopping at the Winmart + Da Nang supermarket. . Photo: DOAN QUANG

The average tax incentives provided for a single household is estimated at several hundred thousand of VND per month.

Ms. Hoang Thi Thu Ha, a resident in Hai Chau District expressed her joy with getting a 2% VAT reduction whilst shopping at the Co.opmart Da Nang supermarket. “The tax cut is a boost to consumption. Lower prices mean I could buy more,”, she said.

According to Mr. Le Truong Ky, the Chairman of the Board of Directors, General Director of DINCO Technical Construction Joint Stock Company, Vice Chairman of the Da Nang Young Entrepreneurs’ Association, VAT is currently the tax that accounts for a large proportion of the total State budget revenue. So, reducing the VAT from 10% to 8% will bring benefits to both consumers and businesses. The savings will help businesses re-invest in production and business activities.

This is the first time the VAT has been synchronously reduced from import, production to processing and consumption processes. This creates ‘a fresh impetus’ to stimulate consumption towards the goal of economic recovery and growth after a long time being affected by the pandemic.

The Da Nang Young Entrepreneurs’ Association has planned to hold a talk to inform and guide member businesses on the VAT reduction policy so that they can  implement it correctly, timely and effectively.

If any businesses fail to apply the tax cut to the detriment of its customers, they will face severe penalties imposed by tax authorities.

Reporting by KHANH HOA – Translating by A.THU