Vietnam’s National Assembly has unanimously approved an extension of a temporary 2 percentage‑point cut in its value‑added tax (VAT)—reducing the standard rate from 10% to 8%—through December 31, 2026. The relief, first introduced in early 2022 to help cushion the economy during the COVID‑19 pandemic, will now continue for another 18 months starting July 1, 2025 .
The broader scope of the program includes most goods and services eligible under the 10% standard rate.
The 8% rate now explicitly covers additional sectors such as information technology, transportation, logistics, refined petroleum, chemicals, coke, coal, prefabricated metals, and gasoline at import and trading stages. However, several sectors remain excluded: telecommunications, financial services, banking, insurance, real estate, securities, and other special-consumption‑taxed goods excluding gasoline.
The Finance Ministry estimates that the extended VAT cut will reduce state revenue by approximately VND 121.74 trillion (nearly USD 4.7–4.9 billion) over the remainder of 2025 and into 2026—about VND 39.
5 trillion in the second half of 2025 and VND 82.2 trillion in 2026. Despite these fiscal trade‑offs, lawmakers argue the policy will stimulate domestic consumption, reduce business costs, boost competitiveness, generate employment, and support a sustainable post‑pandemic recovery .
To cushion revenue losses, the government plans to strengthen tax administration, enhance digitalization in tax processes, enforce tighter fiscal discipline, and prioritize growth‑focused spending. The measure aligns with broader economic targets, including aiming for over 8% GDP growth in 2025 and laying groundwork for a double‑digit expansion into the next half‑decade .
This policy provides substantial relief for consumers and businesses alike, helping to ease everyday costs and improve margins in a wide range of sectors—without applying to already-exempt sectors like telecoms or real estate. The government appears confident that strategic cost management and stronger tax oversight can offset revenue losses.
