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Airline’s environmental tax exemption proposal rejected

By Van Phong

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HCMC – Based on the current situation and the environmental protection tax law, the Ministry of Finance has turned down a proposal on exempting environmental projection tax on jet fuel.

The Ministry of Finance has written to Vietnam Airlines saying that the jet fuel tax exemption has yet to be prescribed by the environmental protection tax law.

Environmental protection tax is designed to restrict the import, production and consumption of goods that are not eco-friendly and to encourage the development of the green economy. Jet fuel tax exemption is not in line with the current regulations, according to the ministry.

The ministry has rejected airlines’ similar proposals on fuel jet tax exemption in the past as the Government still needs many enterprises to share its burden of ensuring social security and improving people’s living standards after the pandemic.

Moreover, the fuel market worldwide has shown signs of cooling off with the recent decline in oil prices.

The Government has taken measures to reduce inflation and help the aviation sector ride out difficulties and recover in the new normal in recent years.

After the resolution on jet fuel tax reduction in 2021, the Government continued to issue another one to extend the tax reduction until the end of 2022. Under the resolution, the tax is cut by 50% from VND3,000 to VND1,500 per liter to enhance support for the aviation sector.

On July 6, 2022, the National Assembly Standing Committee issued a resolution to reduce the environmental protection tax on gasoline, oil and grease, including jet fuel, to the floor level in the tax bracket from July 11 to December 31, 2022.

That was the maximum adjustment the National Assembly Standing Committee is allowed to make under its authority. If necessary, the request for further environmental protection tax reduction will be considered and decided by the National Assembly.

The reduction of environmental production tax on jet fuel has recently brought positive effects to the aviation industry, contributing to helping airlines reduce input fuel costs and maintain their operations.

Regarding the proposal to adjust the ceiling on domestic airfares and impose fuel surcharges, the Ministry of Finance requested Vietnam Airlines to seek approval from the Ministry of Transport.

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