Vietnam: Green tax hike on petrol

Vietnam: Green tax hike on petrol

The Ministry of Finance (MoF) is going ahead with its plan to increase
environmental protection tax on petroleum from the current VND1,000-4,000 to
VND3,000-8,000 per litre, despite objections from other ministries and the
public.

In its second draft of the Law on Environmental Protection Taxes announced
last week, the ministry proposed a tax hike on fuel consumption of
VND3,000-6,000 per litre for aviation fuel, VND1,500-4,000 per litre for
diesel, VND300-2,000 per litre for kerosene, and VND900-4,000 per kg for
mazut.

If the new tax rate is applied, the price of gasoline at the pumps will rise
to around VND22,000 (roughly US$1) per litre from the average price at the
pump of around VND16,000 to VND17,000 for petrol and VND10,000 to VND11,000
for diesel and mazut, respectively, analysts said.

The Ministry of Transport (MoT) told the Ministry of Finance (MoF) that Viet
Nam would apply two petroleum quality standards based on the Euro 2 and Euro
4 emission standards, suggesting that the MoF set a lower environmental
protection tax for Euro 4, which cleans emissions from diesel cars, to
encourage the production of more eco-friendly petroleum.

The Viet Nam National Petroleum Group (Petrolimex) said the calculation of
environmental protection tax on fuel should encourage E5 bio-fuel
consumption.

The Viet Nam Petroleum Association (VINPA) has supported the MoF's tax
proposal, though it has pointed out that the maximum tax of VND8,000 per
litre is too high.

The VINPA has suggested that the MoF hike environmental protection tax from
the current VND3,000 to VND5,000 per litre for petrol; from VND1,500 to
VND3,000 per litre for diesel; from VND3,000 to VND5,000 per litre for
aviation fuel; and from VND900 to VND3,000 per kg for mazut.

Earlier, the Ministry of Foreign Affairs said the MoF should carefully
consider its tax hike proposal as local businesses, which are already paying
many kinds of taxes and fees, will be further hit. It asked the MoF to do an
assessment on the impact of the tax hike on the economy and people's lives.

The draft law is scheduled to be submitted to the Finance-State Budget
Committee of the National Assembly (NA) for consideration this month. It
will be submitted to the NA Standing Committee in August, and to NA deputies
in September. The NA will review the draft law for approval in October.

MoF's deputy minister Tran Xuan Ha said the tax hike is one of the measures
to better manage petroleum products while limiting smuggling. Its impact on
businesses, people and inflation will be calculated, he added.

Last year, around VND42.3 trillion ($1.9 billion) was collected in
environmental protection tax, of which petroleum raked in VND40.2 trillion.

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Link to Original Article:
http://bizhub.vn/news/green-tax-hike-on-petrol_287776.html

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John Diecker
APT Consulting Group Co., Ltd.

www.aptthailand.com