Continuation of 2% VAT Reduction Until the End of 2026

In response to the significant negative impacts of U.S. tariff measures, global conflicts, and political instability on the Vietnamese economy, the National Assembly passed Resolution No. 204/2025/QH15 on 17 June 2025, extending support for businesses through a reduction of value-added tax (“VAT”).

Specifically, the National Assembly approved a 2% reduction in the VAT rate, applicable from 1 July 2025 through 31 December 2026. Unlike previous resolutions that applied the reduction in six-month intervals, this resolution provides for an 18-month reduction period, allowing businesses greater certainty in planning and implementing long-term strategies.

Notably, Resolution No. 204/2025/QH15 also expands the scope of goods and services eligible for the reduced VAT rate of 8%. Starting 1 July 2025, additional categories such as gasoline, coke, information technology products and services, and chemical products will benefit from the lower VAT rate, compared to earlier VAT reduction policies.

At present, the detailed implementation guidelines are still pending, as the Government is expected to issue a Decree to ensure consistent application of the policy. Nonetheless, the Decree is anticipated to adhere to the spirit and objectives of supporting businesses as articulated in Resolution No. 204/2025/QH15.