Credit institutions expect to enjoy 2 per cent VAT cut next year

The VNBA made the move last week as, under a draft policy on VAT reduction for the first six months of next year, the credit institutions do not feature in the list of commodities and services that will receive the benefit.

View of a transaction office of ABBank in Hà Nội. Business results of credit institutions, especially small-sized ones, in 2023 and 2024 are predicted to decline compared to previous years. VNA/VNS Photo

HÀ NỘI — The Vietnam Banks Association (VNBA) has proposed a 2 per cent value-added tax (VAT) reduction for credit institutions because the institutions are currently facing difficulties, with their non-performing loans and potentially risky debts tending to increase significantly.

The VNBA made the move last week as, under a draft policy on VAT reduction for the first six months of next year, the credit institutions do not feature in the list of commodities and services that will receive the benefit.

The VNBA therefore has sent its proposal to the Ministry of Finance and the Vietnam Chamber of Commerce and Industry (VCCI) while the two agencies are receiving comments on the draft policy.

According to the VNBA, it agrees with the content of the draft policy to reduce VAT by 2 per cent in the first half of 2024, but proposes credit institutions be added to the list of commodities and services that will receive the 2 per cent VAT cut. It expects the supplementation will be included in the content of a Government’s report on the implementation of the State budget in 2023 and estimate in 2024 to be submitted to the National Assembly for approval.

According to the VNBA, the operations of credit institutions are currently very difficult. Their bad debts and potentially risky debts are tending to increase significantly. The business results of the institutions, especially small-sized ones, in 2023 and 2024 are predicted to see a sharp decline compared to previous years.

Meanwhile, the institutions still have to implement interest rate support programmes, and service fee exemptions and reductions for firms and people under the direction of the Government.

To create conditions for the institutions to have more resources to support firms and invest in digital transformation technology, ensuring security and safety in operations, the VNBA therefore has proposed adding the credit institutions to the list of commodities and services that will receive a 2 per cent VAT reduction next year.