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Reviving Vietnam's Economy with Fiscal Policies: Resolution 43

Vietnam’s National Assembly (NA) adopted Resolution 43/2022/QH15 (Resolution 43) on fiscal and monetary policies to support Vietnam’s economic recovery due to the pandemic and subsequent lockdowns in 2021.

Under Resolution 43, the government has asked the Ministry of Planning and Investment (MPI) to draft policies that would help Vietnam in its post-covid recovery. Resolution 43 sets a number of policies to support key growth and help Vietnam achieve a GDP growth of 6.5 to 7 percent between 2021 to 2025.

Resolution 43 aims to address issues in order to main macroeconomic stability and resilience so that the Vietnamese economy can grow. The NA has approved a package of approximately US$15 billion under the Resolution.

Vietnam Briefing looks at the main highlights of the Resolution.

VAT reduction and CIT deduction

Resolution 43 sets a 2 percent reduction in VAT as well as CIT deduction for businesses. We have discussed these developments earlier here.

Incentive measures

Healthcare: The government has committed VND 14 trillion (US$620 million) for the construction and modernization of health and medical facilities, disease control, hospitals, and human resources, as well as treatment related to COVID-19.

Social security: Funds of VND 5 trillion (US$220 million) allotted for Vietnam Bank for Social Policies for preferential loans. This includes investment in job training, vocational education, and social security.

Support for businesses, business households, and cooperatives: VND 40 trillion (US$1.76 billion) of funds for loans with a rate of 2 percent a year through commercial banks for a variety of industries.

Infrastructure development: Funds of 113.55 trillion (US$5 billion) allocated for infrastructure projects in transportation, IT, digitalization, water security, climate change, and natural disasters.

House rent: The government commits VND 6.6 trillion (US$2.9 million) for employee housing for those working in industrial zones, export processing zones, and key economic areas

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To further help with the implementation, the government issued Resolution 11/NQ-CP (Resolution 11) guiding socio-economic recovery and implementing policies of Resolution 43.

We discuss the resolution below:

Who does Resolution 11 apply to?

Resolution 11 applies to employees affected by the pandemic, businesses, cooperatives, and businesses households as well as industries to stimulate economic recovery.

What are the incentives?

In line with Resolution 43, VAT has been reduced to 8 percent. See update here.

Airline industry: 50 percent reduction in environmental protection tax on aviation fuel.

Land rent: A 30 percent reduction for businesses, households, and individuals that lease directly from the State and that have endured businesses suspensions due to the pandemic. The government has similarly reduced land rent for those affected by the pandemic in 2021 as well.

Automobile industry: 50 percent reduction on registering vehicles that are manufactured or assembled locally.

The government is also expected to come up with detailed regulations on the extension of CIT, PIT, VAT, excise tax, and land rent.

While most policies have been issued for 2022 and 2023, the government may extend some incentives depending on the economy and post-pandemic recovery.