Prices of products and services decreasing on VAT tax cuts

VietBusinessNews - Businesses are considering slashing prices of many products and services after the Government announced the 5% VAT cuts on 18 categories of products and services. Analysts said that the tax cut may help lead to the price decreases of 2-5% or even 6%.

Gov’t announces abundant tax exemptions, price reductions

Hoang Quoc Tuan, Deputy General Director of Dong Nai Tile Company, said that with the 5% tax cut, the price of a brick will decrease from VND1,100/brick to VND1,045, while the price of a tile for roofing will decrease from VND6,800 to VND6,460.

Automobile manufacturers and importers have announced the price cuts of 4.3-6.15% for different car models now available on the market. Civic 1.8MT, for example, has seen the price decrease of VND23.5mil/car, Civic AT VND26.5mil, and Civic 2.0 AT VND29.5mil. Seven models by TMV have seen the price decreases of $1,100-4,900 per car.

Euro Auto, the official distributor of BMW cars, has also announced the price decreases of 4.55-5.88%, while Z4 model enjoys the sharp price decrease of up to 6.8%

Phan Dinh Duc, General Director of PetroVietnam Fertiliser and Chemicals Company has not made announcement on price decreases, but has committed that it will keep the sale prices at reasonable levels, so that farmers can purchase materials for production at ‘soft’ prices.

General Director of 5-star hotel Majestic Tao Van Nghe said that the decision on 5% VAT cut proves to be the good news for hotels, especially when hotels all are facing the low occupancy rate.

Nghe said that the hotel cut the room rate to $150 per night already, but will cut the room rate by another 5% to $142.5/night after the new decision on VAT reduction.

Travel firms said that if hotels accept to reduce room rates, the tour fees will decrease.

Nguyen Quoc Ky, Director of Vietravel, a travel firm, said that the firm had a working session with a domestic airline on slashing airfare for domestic flights. The air carrier has agreed to lower air tickets to be sold to Vietravel to VND2.6mil, while the maximum airfare is VND3.4mil.

Ky said that Vietravel has slashed tour fee for 21 routes, both outbound and inbound. The tours in the north have seen the fee decrease by VND700,000/traveler, in the central region by VND500,000, while tour to Phu Quoc has enjoyed the fee decrease of VND200,000. The travelers to Australia have enjoyed the tour fee decrease of $180/traveler, to Malaysia-Singapore $140 and to South East Asian countries by 22-30%. Ky said that Vietravel is still considering further tour fee decreases. (Tuoi Tre)