Tax accounts for more than 20% of retail price of petroleum

Mr. Pham Dinh Thi answering at the Press conference

Concerning the reason for proposal on the adjustment of Environment Protection Tax for petroleum, Mr. Thi said: Petroleum is a product containing chemicals causing a bad impact on the environment. Countries listed petroleum to subjects of special consumption tax and environment protection tax with aims to protect the environment with different names such as: fuel tax, energy tax, vehicle tax. According to the current Law on Environment Protection Tax, the petroleum is subject to tax from to 1,000 vnd – 4,000 vnd per litter.

The current specific environment protection tax rate for petroleum is the maximum rate in the tax frame (aviation fuel) or nearly maximum rate in the tax frame. Accordingly, it is necessary to adjust the specific environment protection tax rate for petroleum to comply with the State’s policy on socio-economic development in each period being very difficult, especially in the context of gradual decline in import duties under international agreements and Vietnam current petroleum price which is lower than countries sharing borders in particular and many other countries in ASEAN countries. Therefore, The MOF proposed to increase the Environment Protection Tax rate from 1,000 vnd - 4,000 vnd per liter to 3,000 vnd - 8, 000 vnd per litter. The proposal on tax frame adjustment for petroleum is to actively respond to oil price in the world market and ensure the country’s benefit in the strong integration when gradually cutting down the import duties in accordance with international agreements, and ensure the stability of the Law, and adjust the specific tax rate to ensure the country’s benefits in big movement of the world’s oil price; and avoid the big difference on selling price with countries sharing borders; and further enhance the responsibility and awareness of organizations and individuals for environment and encourage production and use of goods familiar with environment; and ensure the implementation of agreements of Vietnam with international community on environment protection.

Answering questions on the basis to increase the Environment Protection Tax rate for petroleum from 1,000 vnd – 4,000 vnd per liter to 3,000 vnd to 8,000 vnd per liter, Mr. Thi stated that: Presently, Vietnam has joined 11 trade free agreements. Under these agreements, Vietnam has to gradually cut down the import duties.

The petroleum retail price in Vietnam is basically lower than countries sharing borders in particular and many other countries in ASEAN countries. According to the Rankings of Global Petrol Prices website on April 3, 2017, the Vietnam’s petroleum retail price is at a low level, ranked 44 of 180 from low to high. Among 136 countries which had higher petroleum retail price than Vietnam are Philippines at 55th, Cambodia at 58th, Thai Lan at 88th and Laos at 97th.

Meanwhile, the tax rate (including import duty, special consumption tax, environment protection tax and VAT) on the basic price of Vietnam is lower rate of more than 20% of an average (37.24% for gasoline; 21.14 % for diesel; 11.5% for petrol and 18.4% for mazut oil) than many countries (Korea is 70.3%; Cambodia is around 40% and Laos is about 56%). On the basis of factors mentioned above, the proposal of MOF on increase of the Environment Protection Tax rate from 1,000 vnd - 4,000 vnd per liter to 3,000 vnd – 8,000 vnd per liter is suitable (tax frame for long roadmap).