Vietnam slashes taxes on petrol imports

July 17, 2023 | 08:34

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The Ministry of Finance (MoF) formally implemented a new petrol import tax at the start of July in what it says is a periodic adjustment based on operational reality, with the ASEAN Free Trade Area's tax reduction plan being cited as the main factor influencing the reduction.

According to the MoF, the average import tax employed in the formula for calculating the base price of petrol has been reduced from 10 per cent to 5.62 per cent, while diesel has been lowered to 0.58 per cent. Fuel oil stayed at 1.38 per cent.

Pham Van Binh, deputy director of the Department of Price Management under the MoF, said, "The price of oil on the commodity market is the primary factor affecting the base price."

Therefore, the MoF has recommended that petroleum wholesalers reduce costs and negotiate a fair purchase price within a reasonable time frame.

Bui Ngoc Bao, chairman of the Vietnam Petroleum Association, stated that this tax reduction is in accordance with the ASEAN Free Trade Area's tax reduction roadmap. Currently, the average petrol import tax is 5.6 per cent, the tax on diesel oil has been reduced to zero, and the import tax on petrol from Southeast Asia has been reduced to 5 per cent. In particular, importers without an ASEAN origin certificate are subject to a 10 per cent levy.

"The tax reduction will have little effect on the price adjustment in the near future since tax costs account for such a small percentage, only about 1 per cent," said Bao, "Petroleum prices will keep fluctuating as a result of their reliance on global price movements and geopolitical uncertainty, but it will be tough to surpass the pinnacle set in the middle of 2022, when prices were close to $1.4 per litre."

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By Angela Nguyen

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