What is the VAT rate on international airline tickets in Vietnam?

What is the VAT rate on international airline tickets in Vietnam?

Based on Point c, Clause 1, Article 9 of Circular 219/2013/TT-BTC stipulating the 0% tax rate as follows:

0% Tax Rate

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c) International transport as stipulated in this section includes transportation of passengers, luggage, goods on international routes from Vietnam to abroad, or from abroad to Vietnam, or both departure and destination are abroad, regardless of whether there is a direct transport vehicle. In the case of international transport contracts that include domestic transport segments, the international transport includes the domestic segment.

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Thus, international airline tickets fall under international transport and are subject to a 0% VAT rate.

What is the VAT rate on international airline tickets in Vietnam? (Image from the Internet)

Are international airline ticket agents required to declare and pay VAT for commissions earned from selling at the listed price in Vietnam?

Based on Clause 7, Article 5 of Circular 219/2013/TT-BTC as supplemented by Clause 1, Article 3 of Circular 119/2014/TT-BTC and Article 1 of Circular 193/2015/TT-BTC which stipulate cases where businesses are not required to declare and pay VAT:

Cases not required to declare and calculate VAT

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7. Other Cases:

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d) Collection of funds not related to the sale of goods or services of the business.

đ) Revenue from goods or services received on consignment for sale and the commission earned from selling at the listed price as stipulated by the consignor for postal services, telecommunications, lottery ticket sales, airline tickets, automobiles, trains, ships; international transport agents; agents of services in aviation and maritime that apply a 0% VAT rate; insurance agency sales.

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Thus, international airline ticket agents are not required to declare and pay VAT for the commissions earned from selling at the listed price.

How is VAT applied to international airline ticket agents who sell tickets with a price difference in Vietnam?

Based on Article 2 of Circular 219/2013/TT-BTC which defines entities subject to VAT:

Entities subject to VAT

Entities subject to Value Added Tax (VAT) are goods and services used for production, business, and consumption in Vietnam (including goods and services purchased from organizations and individuals abroad), except those not subject to VAT as guided in Article 4 of this Circular.

Furthermore, according to Article 4 of Circular 219/2013/TT-BTC which defines entities not subject to VAT, any price difference from the sale of international airline tickets falls under entities subject to VAT.

Additionally, based on Article 11 of Circular 219/2013/TT-BTC stipulating a 10% tax rate and referring to Articles 9 and 10 of Circular 219/2013/TT-BTC, any price difference from the sale of international airline tickets is subject to a 10% VAT rate.

10% Tax Rate

The 10% tax rate applies to goods and services not specified in Articles 4, 9, and 10 of this Circular.

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However, based on Article 1 of Decree 72/2024/ND-CP regarding VAT reduction and referring to Appendices 1, 2, 3 issued with Decree 72/2024/ND-CP, the price difference from the sale of international airline tickets is subject to a 2% VAT reduction.

VAT Reduction

1. Reduce VAT for groups of goods and services applying a 10% tax rate, except for the following groups:

a) Telecommunications, financial activities, banking, securities, insurance, real estate business, metals and prefabricated metal products, mining products (excluding coal mining), coke, refined petroleum, chemical products. Details in Appendix I issued with this Decree.

b) Products and services subject to special consumption tax. Details in Appendix II issued with this Decree.

c) Information technology according to the law on information technology. Details in Appendix III issued with this Decree.

d) The VAT reduction for each type of goods and services specified in Clause 1 of this Article is uniformly applied in the stages of import, production, processing, commercial business. Coal mined and sold (even if the coal is mined and then sieved, classified through a closed process before selling) is subject to VAT reduction. Coal listed in Appendix I issued with this Decree, other than extraction, is not subject to VAT reduction.

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Thus, for international airline ticket agents who sell tickets with a price difference, that difference is subject to VAT, and the applicable VAT rate is 8%.