Vietnam News Agency reported that 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 February 1st 2009, describing it as an incentive that will stimulate consumption.

Mr Do Duy Thai general director of Thep Viet Joint Stock Company said that, as a result of the reduction, the cost of his company’s steel has reduced by 5% to VND 11.7 million per tonne. He added that these savings will be passed on to the consumer.
Mr Nguyen Van Vu general director of 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.

Mr Vu said that, following January’s VAT increase of 5% to 10%, 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 a recent decision by the Prime Minister, a range of goods and services will benefit from a 50% reduction in VAT, beginning on February 1st 2009 and continuing until the end of this year. Many businesses will also benefit from an extension to the deadline for tax payments and number products, including wooden items, rice and fertilizers will benefit from an abolition of export duty.

(Sourced from english.vietnamnet.vn)