CAAV proposes tax cuts and financial support for airlines

CAAV proposes tax cuts and financial support for airlines

It recommended reviewing and possibly adjusting the price cap on domestic air routes if necessary to help airlines maintain operations.

The authority also proposed allowing airlines to apply a fuel surcharge on domestic airfares, with a flexible adjustment mechanism based on fluctuations in Jet A-1 fuel prices. — Photo baochinhphu.vn

Amid complicated geopolitical developments and increasing fuel prices, the Civil Aviation Authority of Vietnam (CAAV) has suggested a number of policy measures to reduce pressure on Việt Nam’s aviation industry. 

These include a proposal to exempt 100 per cent of the environmental protection tax on aviation fuel until the end of May this year, and to add aviation fuel to the list of goods eligible for a reduced value-added tax (VAT) from 10 per cent to a lower appropriate rate.

The authority also proposed allowing airlines to apply a fuel surcharge on domestic airfares, with a flexible adjustment mechanism based on fluctuations in Jet A-1 fuel prices. 

In addition, it recommended reviewing and possibly adjusting the price cap on domestic air routes if necessary to help airlines maintain operations.

Alongside policy measures, CAAV suggested establishing high-level discussions with countries that are currently restricting fuel exports, such as Thailand and China. 

The aim is to facilitate Vietnamese companies in fulfilling existing Jet A-1 fuel contracts and securing new supply sources.

The agency also proposed cutting certain aviation service fees by 50 per cent, including landing and air navigation fees, similar to support measures implemented during the COVID-19 pandemic.

For other ministries and agencies, CAAV recommended that the Ministry of Finance continue studying tax and fee support mechanisms, while the State Bank of Vietnam consider raising credit limits and providing L/C guarantees for aviation fuel suppliers to ensure stable fuel supply.

In addition, CAAV proposed that the Ministry of Industry and Trade expand fuel supply sources and direct domestic refineries such as Dung Quất Refinery and Nghi Sơn Refinery to maximize Jet A-1 production capacity. 

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