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Tuesday, May 17, 2022

MoF rejects proposed tax exemption and reduction for airlines

The Saigon Times

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HCMC – The Ministry of Finance (MoF) has turned down a proposal on tax exemption and reduction for enterprises in the aviation industry, saying these businesses have earned multiple benefits from the Government’s incentive policies. Moreover, such moves, if any, fall within the authority of the National Assembly.

Previously, some airlines had petitioned the Government for exemption of the corporate income tax (CIT) in 2022 and reduction of value-added tax (VAT) to 5%, besides cutting the jet fuel import tariff from 7% to zero. This proposal was made in the context that the aviation industry is facing difficulties due to increasing fuel prices,  while enterprises are still reeling from heavy losses due to the pandemic outbreak in the past two years, VNExpress reported.

In its recent response to the proposal, the Ministry of Finance said that CIT and VAT are applied based on the Law on Corporate Income Tax and the Law on Value-Added Tax. Therefore, the proposal to reduce VAT from 10% to 5% and exempt CIT must be approved by the National Assembly, according to the ministry.

Regarding VAT, aviation businesses are benefiting from the policy of reducing the tax rate by 2 percentage points. At the same time, MoF has submitted to the Government a draft decree extending the deadline for paying taxes and land rents for a number of businesses, including those in the aviation industry.

In addition, the aviation industry is also benefiting a lot from the Government’s recent policies on taxes, fees, and land rentals that are aimed at supporting people and businesses adversely affected by Covid-19.

Currently, the most-favored nation (MFN) tariff (a normal non-discriminatory tariff charged on imports) for jet fuel is 7%. If jet fuel is imported from countries that have signed the Free Trade Agreements (FTAs) with Vietnam, the MFN tariff is 5% on the basis of reciprocity.

Given the difficult budget context, the MoF said that further support for the aviation industry needs careful consideration, ensuring the harmonization of the interests of enterprises and the State.

With the negative impact of recent fuel prices, the ministry said it had submitted to the Government and the National Assembly for approval new fiscal and monetary policies to support the socio-economic recovery and development, including tax and fee relief worth about VND223 trillion.

In 2020, the Government offered support with the combined value of VND129 trillion. In 2021, the support was bigger, valued at about VND145 trillion.

 

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