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Sweeping tax cuts designed to stimulate economy
Businesses have expressed optimism regarding the government’s decision to reduce value added tax, extend the deadline for tax payments and abolish export tax as from Feb. 1, describing it as an incentive that will stimulate consumption.
Do Duy Thai, General Director of the Thep Viet Joint Stock Company, said that, as a result of the reduction, the cost of his company’s steel has reduced by 5 percent to 11.7 million VND per tonne. These savings will be passed on to the consumer, he added.
The construction materials market is forecast to recover in the near future, and is expected to grow by 30 percent during February, compared to previous months.
Nguyen Van Vu, General Director of the Southern Motor and Farm Machine Company, said that, thanks to the VAT reduction, he is optimistic about the possibility of selling all 80,000 of the engines and farm machines manufactured by his business. This decision by the government will enable farmers to invest more in developing agricultural production.
Vu said that, following January’s VAT increase of 5 -10 percent, his company’s engine and farm machine sales fell markedly. Even though the company adopted measures to address this situation, such as reducing its profit margins on the sale of goods, the situation did not improve.
According to Vo Truong Thanh, President of the Truong Thanh wood industry group, the abolishment of export tariff on wooden products manufactured from imported raw materials will act as a “catalyst”, helping businesses to increase their investment in production development and market expansion, following a difficult period for the industry.
According to a recent decision by the Prime Minister, a range of goods and services will benefit from a 50 percent reduction in VAT, beginning on Feb. 1 and continuing until the end of this year. Many businesses will also benefit from an extension to the deadline for tax payments and a number products, including wooden items, rice and fertilisers will benefit from an abolition of export duty.
The move is one of a series of government measures to assist businesses in avoiding an economic recession.
vna
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