VAT Reduction Extension Granted for Another 6 Months in Vietnam Amid Economic Uncertainty; Airlines Get Loan Extensions to Recover from Pandemic Impact

The National Assembly has recently passed a resolution to extend the 8% value-added tax (VAT) reduction by 2% for another 6 months. The aim of this extension is to stimulate demand, increase consumption, and help people save money on spending and living expenses. However, the tax reduction does not apply to sectors such as real estate, securities, banking services, and telecommunications.

The decision to extend the VAT reduction period is expected to reduce budget revenue by approximately 24,000 billion VND in the second half of the year. This will lead to a decrease in overall budget estimates of nearly 47,500 billion VND for the whole year. To ensure that revenue sources remain intact and avoid affecting budget estimates, expenditures, budget deficits, and urgent needs arising from the tax reduction, the government has been tasked with finding alternative sources of revenue.

In addition to the VAT extension, Vietnam Airlines has been granted an extension to repay their VND4,000 billion refinancing loan. The State Bank will provide three more extensions for debt repayment when the deadline comes due. This is part of a strategy to support the national airline and help it overcome immediate difficulties caused by the Covid-19 pandemic.

Vietnam Airlines plans to use the loan package until the end of 2021. The company aims to accelerate comprehensive restructuring efforts and complete a project to overcome difficulties in order to recover quickly. Additionally, they target parent company revenue of 80,984 billion VND and consolidated revenue of 105,946 billion VND this year. They also plan to divest capital at Tan Son Nhat Cargo Services Co., Ltd. and aim for a consolidated profit target of over 4,230 billion VND by