Tax Update: Vietnam VAT Rate Reduction from 10% to 8% in 2023

On 17 April 2023, the Vietnamese Government agreed in principle with the Ministry of Finance’s proposal of reducing the VAT rate from 10% to 8% which would be submitted to the National Assembly for consideration and approval as early as possible.

The Ministry of Finance opts for the option of reducing VAT from 10% to 8% for all goods and services which are currently subject to a VAT rate of 10%.

It was estimated that the VAT rate reduction would cause the State Budget revenue to shrink by VND 35 trillion in the second half of 2023, or on average VND 5.8 trillion per month.

The VAT reduction aimed to stimulate consumption demand in line with the current economic context, therefore, promoting production and business to recover and contribute to the State Budget and the economy.

Once approved by the National Assembly, the VAT rate reduction would be applied until the end of 2023.