On Wednesday, Vietnam’s parliament made the decision to extend the ongoing reduction in the value-added tax (VAT) on goods and services until the conclusion of June 2024.
The VAT reduction, lowering it from 10% to 8%, has been in effect since early 2022 with the aim of stimulating domestic consumption and production. This measure is particularly crucial as Vietnam’s export-oriented economy contends with challenges arising from a slowdown in global demand.
Government data released on Wednesday indicated that Vietnam’s exports, for the year leading up to November 15, experienced a 6.4% decline compared to the same period the previous year, amounting to $306 billion. This decline is attributed to persistent weak global demand, impacting shipments of items such as garments, smartphones, and electronics.
Vietnam’s economic growth for this year is projected at 5%, falling below the initial government target of 6.5% and representing a deceleration from the 8.02% expansion experienced in the previous year, which had a lower base.