Government rejects airlines’ demand for further tax cuts
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The Ministry of Finance has turned down airlines’ requests for further tax breaks, saying they have received enough support from the government.
In response to several airlines’ request to reduce value-added tax from 8 percent to 5 percent and fuel import tax from 7 percent to zero, the ministry said in a statement Friday that only the National Assembly can decide on VAT cuts.
The current 8 percent VAT is already a reduction from the normal 10 percent, and aviation companies are also eligible for the lower rate, it said.
It also pointed out that the aviation industry has already benefited from a lot of support in terms of taxes and fees since the pandemic began.
Environment tax on jet fuel has been reduced by half to VND1,500 per liter until the end of this year.
It is important to ensure a balance between the benefits companies and the government get, the ministry said.
Vietnamese carriers served 14.5 million passengers in the first four months of this year, up 26.3 percent year-on-year, according to the General Statistics Office.
Airlines resumed regular international services in March after a two-year hiatus due to Covid-19.
Questions & Answers
Q.What specific tax reductions did airlines request from the Ministry of Finance?
What specific tax reductions did airlines request from the Ministry of Finance?
Airlines requested a reduction in value-added tax from 8 percent to 5 percent. They also asked for the fuel import tax to be reduced from 7 percent to zero. The Ministry of Finance turned down these requests.
Q.Why did the Ministry of Finance reject the airlines' request for further tax cuts?
Why did the Ministry of Finance reject the airlines' request for further tax cuts?
The Ministry stated that airlines have already received sufficient government support. They also mentioned that only the National Assembly can decide on VAT cuts. A balance between company and government benefits is also important.
Q.What tax relief has the aviation industry already received since the pandemic began?
What tax relief has the aviation industry already received since the pandemic began?
The current 8 percent VAT is already a reduction from the normal 10 percent. Also, the environment tax on jet fuel has been halved to VND1,500 per litre, effective until the end of this year.
Q.When did Vietnamese carriers resume their regular international flight services?
When did Vietnamese carriers resume their regular international flight services?
Vietnamese carriers resumed their regular international services in March of this year. This followed a two-year suspension due to the Covid-19 pandemic. The industry has seen an increase in passenger numbers since then.