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Increasing VAT affects all households. For the poor and near poor, VAT increases have a significant impact. Near-poor households may experience reduced actual expenditure and fall into poverty.
The draft of the VAT increase – VAT of the Vietnamese ministry of finance launched in August/2017 faced the opposition of public opinion. By January, 2018, in the draft report to the Government proposed to develop the Law amending and supplementing some articles of the Law, the Ministry of Finance has extended the VAT increase.
Specifically, Clause 3, Article 8 of the Law on Value Added Tax currently regulates the ordinary tax rate of 10%. Ministry of Finance proposed, from January 1st , 2019, increase the VAT from 10% to 11%; As of January 1st , 2020, this tax will increase from 11% to 12%. By 2020, the VAT will increase by 20% compared to the current plan proposed by the Ministry of Finance.
Before the reaction of the public, at the meeting on May 26th 2018, the Minister of Finance confirmed that he would keep the VAT rate at 10%, not raise the VAT to 11-12%.
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