Increase in the environmental protection tax frame not affecting the current petrol and oil price

The EPT is now3.000 vnd/litter and only changed when being allowed by the National Assembly Standing Committee. Photo: H. Van

Be proactive in response

Mr. Vu KhacLiem analyzed: When Vietnam is in deeper integration, the State budget revenues and expenditures must be restructured. If 10 years ago, the State budget revenues depended on the imports and exports, at present and the coming period, the revenues wouldsharply decline due to the integration agreements.

Such as the petrol and oil in the ASEAN Free Trade Agreement (ATIGA), , ASEAN – China Free Trade Agreement (ACFTA) and the ASEAN - Korea Free Trade Agreement ( AKFTA), Vietnam must implement a roadmap to cut the special preferential import tariffs.

Specifically: In ATIGA Tariff list, the import tariffs for oils will be 0%, for petrol will be about 8% by2021, about 5% by 2023 and 0% by 2024. In the ACFTA tariff list, some tariffs for oils were 5% and 8% in 2016. In the AKFTA tariffs, the tariffs for oils will be 0%; for petrol about 10% by 2018 and about 8% by 2021.

That means, depending on each period and stage of the country’s economy, the State needs to adjust different taxes, including EPT to replace the import duties which have been gradually cut under the international agreements to ensure the stability of the tax policy.

On the other hand, the retail prices of petrol and oil in Vietnam are basically lower than in the bordering countries in particular, and many other countries in the ASEAN region, and Asia in general, so the domestic taxes are used to compensate for import duties, maintaining the stability and consistency with the prices of surrounding countries to restrict petrol smuggling.

According to the current regulations, the EPT rate being applied for oil and petrol is equal or nearly equal to the ceiling rate in the tax frame. Thus, the necessity of adjustment for EPT rate for petrol and oil in consistent with the socio-economic development policy of the State in each period is very difficult. Thereby, the adjustment for EPT frame as the basis for adjustment of the specific tax rate in the coming period is really necessary.

Firstly, the Ministry of Finance proposed that the tax rate for petrol, oil and grease will be adjusted according to the minimum tax rate which is equal to the current specific tax rate. The maximum tax rate is 2 timesthe maximum tax rate in the current tax frame. That is, the tax frame for petrol, but ethanol is at 3000-8000 vnd/liter, for aviation fuel is 3000-6000 vnd / liter, for diesel is 1500-4000vnd/liter; for petrol E5 and E10 is 2700-7200 vnd/ liter and 2500-6800 vnd/ liter. Particularly, oil stays at the current tax frame, because as oil is an essential commodity for the poor, ethnic minorities in the remote areas.

Currently, the Law on EPT regulates the tax rate frame for petrol from 1,000 VND to 4,000 VND / liter, the current =rate is VND3,000 / liter. The tax frame with aviation fuel is from 1,000 VND to 3,000 VND / liter, the current rate is 3,000VND/liter.

“I would stress that this is proposal for increase in the tax rate frame to actively adjust for the next period but is not an increase in the specific tax rate. If necessary, the Ministry of Finance will submit to the Government to suggest the National Assembly Standing Committee to adjust to a specific tax rate in line with the socio-economic development policy in each period. Therefore, this proposal does not affect the current tax rate as well as prices” – Mr. Liem said

Harmony in benefits

Answering concerns about the frame adjustment to prepare for the adjustment of tax rates afterwardswhen import tax reduces, it will not be in line with the maximum support of the Government for enterprises, a representative of the Tax Policy Department stated that: the Finance Ministry's views are right and strict implementation of the Government Resolution on establishment and application of preferential policies on finance, credit, taxes and fees to promote the enterprise’s development.

"However, the support must be in accordance with targets and objects, and ensures the general benefits of the economy, cannot be a common support. In other words, the decrease in tax for cheap price of petrol and oil is not to support enterprises. We also have enterprises producing petrol and oil in the country, ensuring the revenues of State budget. Therefore, the adjustment of tax policy should harmonize the interests between citizens, enterprises and the State "- Vu KhacLiemconfirmed.

Explaining more about the reason for building this draft law, Mr. Liem acknowledged that: Now, the continued environmental degradation posed challenges to the sustainable economic development of Vietnam in the coming time. If the measures to diminish the status of toxic emissions are not issued in a timely fashion, the pollution risks will be increasing.

On the other hand, along with the spirit to cope with the effects of international integration as mentioned above, the final review and assessment of nearly 5-year implementation of the Law of the Ministry of finance showed that the tax policy on environmental protection incurred difficulties and limitations that need to be completed.

Hanoi announces names of 149 enterprises with tax debt VCN – Implementing a tax debt management plan in 2017, the Hanoi Tax Department has published a ...

"Currently, under the provisions of the Law issuing new Legal Normative Documents, the Ministry of Finance is collecting comments from ministries, organizations and individuals to submit to the high levels to bring the draft law amending and supplementing the Law on EPT on the law establishment program in 2017. After being approved, the project will be officially deployed, "- Mr. Liem emphasized.