Tax schemes could revive travel

10 May 2013 2047 | World Travel News

Vietnam tourism authorities are presenting a tax reduction proposal to the government to boost tourism to the country.

Ministry of Culture, Sports and Tourism has sent a request to the Prime Minister asking for a reduction of 50% on the Value Added Tax and 50% on income tax for the remainder of the year.

“The scheme should help businesses in the tourism sector to build growth during difficult times,” the ministry spokesperson told local media.

According to the ministry, prices of essential commodities such as gasoline, electricity and even the land tax had increased, resulting in higher tourism prices at a time when neighbours are cutting tour costs.

While Vietnam officials are reporting a soft tourism market all of its neighbours in the Mekong region are reporting gains both in trips and spend.

Fearing the country is losing its competitive edge, the Ministry will press the PM to call on the Ministry of Finance to cut taxes and submit a related proposal to the National Assembly at the earliest possible moment.

In addition, the ministry is backing a proposal to extend the VAT refund policy for foreign visitors to encourage more shopping in Vietnam.

Foreign visitors and overseas Vietnamese can claim back 85% of the VAT charged on goods purchased in the country. The VAT refunds on purchases started 1 July 2012 and will expire 30 June 2014 under a pilot programme at the two main airports in Hanoi and Ho Chi Minh City.

Meanwhile, tourism associations and travel agents said that a substantial increase in visa fees earlier this year was the key factor applying the brakes on tourism growth.

Under Circular 90/2012/TT/BTC of Vietnam’s Ministry of Finance, the fee for a single-visit visa increased from US$25 to US$45, 1 January 2013.

ASEAN nationals enjoy a visa-free stay of up to 15 days in the country (exception Myanmar).

Vietnam Tourism Association vice chairman, Vu The Binh, said the decision to increase visa fees was untimely as the inbound tourism sector was already experiencing hardship.

In addition, foreign visitors from a selected group of countries will no longer enjoy visa exemptions later this year.

For January to April, international tourist arrivals to the country declined 3.18% to 2,414,361 visits over the same period last year.