Temporary VAT Reduction in Vietnam: Consumer Behavior Analysis

ABSTRACT This study investigates the impact of temporary VAT rate changes on consumer behavior in Vietnam, particularly concerning the VAT reduction implemented during 2023–2024. The research analyzes annual survey data and household expenditure reports to assess changes in consumer spending on durable goods during the first half of 2024 (2024 H1) following the VAT decrease. The results showed households fully understood that the 2% VAT cut were 8 percentage points more likely to plan higher durable‑goods spending in 2024 H1. The spending boost is strongest for low‑wealth and income‑insecure households, confirming that temporary VAT relief mainly stimulates big‑ticket purchases among liquidity‑constrained consumers. The focus on durable goods may limit the applicability of the findings to other product categories. This study focuses on durable goods and may limit the generalizability of findings to other product categories.