Công văn 14232/BTC-TCT

To: Departments of Taxation of central-affiliated cities and provinces.

The Ministry of Finance received Official Dispatches of a number of Provincial Departments of Taxation and Representative board of airline companies in Việt Nam on policies on VAT on receipt from the change of flight itinerary or the cancellation of flight.  Regarding this issue, the Ministry of Finance has opinions as follows:

In clause 1 Article 5 of Circular No. 219/2013/TT-BTC dated 31/12/2013 by the Ministry of Finance guiding cases not subject to declaration and calculation of VAT as follows:

"1. An organization or individual receives a monetary compensation (including compensation for land and property on land that is withdrawn by a competent authority), bonus, allowance, or payment for transfer of emission permit, or other revenues…”

In point c clause 1 Article 9 of Circular No. 219/2013/TT-BTC dated 31/12/2013 by the Ministry of Finance providing guidance on tax rate of 0% as follows:

“c) International transport includes passenger transport and freight transport along international routes from Vietnam to other countries and vice versa, or from one foreign country to another, regardless of the ownership of vehicles. If the international contract includes a domestic segment, the segment is also considered international transport.”

In point c clause 2 Article 9 of Circular No. 219/2013/TT-BTC dated 31/12/2013 by the Ministry of Finance providing for conditions for application of 0% VAT:

“c) The documents below are compulsory for international transport:

- A international passenger transport or freight transport contract between the service provider and the service buyer. For passenger transport, the tickets are considered contracts. Providers of international transport services must comply with transport laws.

- Documents proving that payment is made by bank transfer or another method considered bank transfers. Receipts for direct payment are compulsory for passenger transport.”

Pursuant to Article 11 of Circular No. 219/2013/TT-BTC dated 31/12/2013 by the Ministry of Finance providing guidance on tax rate of 10%.

- Receipts from customers for the change of flight itinerary like date of flight, time of flight, name of passenger, etc. are receipts for airline services and therefore subject to VAT. To be specific:

Receipts from international flights shall apply 0% tax according to guidance in point c clause 1 and point c clause 2 Article 9 of Circular No. 219/2013/TT-BTC dated 31/12/2013 by the Ministry of Finance.

Receipts from domestic flights shall apply 10% tax according to guidance in Article 11 of Circular No. 219/2013/TT-BTC dated 31/12/2013 by the Ministry of Finance.

- The receipts from the cancellation of international flights and domestic flights are monetary compensation and not subject to VAT according to guidance in clause 1 Article 5 Circular No. 219/2013/TT-BTC dated 31/12/2013 by the Ministry of Finance.

Any receipts not according to the guidance of the Ministry of Finance in this Official Dispatch will be unchanged.