Vietnam Proposes Tax Cuts to Support Aviation Sector

Photo courtesy of VN Express

Vietnam's Civil Aviation Authority (CAAV) has proposed several measures aimed at alleviating pressure on the aviation industry amid rising fuel costs and geopolitical tensions. These proposals include exempting 100% of the environmental protection tax on aviation fuel until the end of May and reducing the value-added tax (VAT) on aviation fuel. Additionally, CAAV suggested allowing airlines to impose a fuel surcharge on domestic flights, with flexibility to adjust based on Jet A-1 fuel price changes.

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The context for these proposals is the rising fuel prices complicating global aviation, along with geopolitical issues affecting supply chains. Vietnam's aviation industry has been striving to recover in the wake of the Covid-19 pandemic, facing challenges from high operational costs and limited fuel supplies. The suggested measures aim to provide airlines with financial relief and help stabilize fuel supply.

Reactions to these proposals have included calls for collaborative discussions with countries like Thailand and China, which restrict fuel exports. This cooperation would support Vietnamese companies in fulfilling existing fuel contracts and securing new ones. The CAAV also recommended reviewing domestic airfare price caps and potentially cutting aviation service fees by 50%, akin to measures from the pandemic era.

Looking forward, the CAAV's plans call for ongoing research into tax and fee support mechanisms by the Ministry of Finance. The State Bank of Vietnam is also urged to consider raising credit limits and providing guarantees for aviation fuel suppliers. Furthermore, the Ministry of Industry and Trade is encouraged to diversify fuel supply sources and enhance domestic refinery production capacities, reported VN Express.

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  Adapted by ASEAN Now · VN Express · 11 Mar 2026