Vietnam considers axing additional taxes to lower retail price of petrol

03:17 PM @ Thursday - 30 June, 2022

The Ministry of Finance has submitted a proposal to the Prime Minister in a bid to reduce the excise tax and value added tax, in addition to the environmental protection tax, as it seeks control rising petrol prices.

A representative of the Ministry of Finance unveiled this information on June 30, but declined to provide further details on the proposal, local media outlets reported.

The domestic retail prices of both petrol and oil have increased by 65- 70% compared to the end of last year, causing great pressure on people’s daily life and business production.

With the global oil market showing signs of fluctuations due to instability, especially relating to the ongoing Russia-Ukraine conflict, getting control of the domestic fuel market can be viewed as a vital means of easing the burden placed on regular citizens.

While the Petrol and Oil Price Stabilization Fund has been exhausted, experts believe that cutting taxes and fees is a viable solution for lowering domestic fuel prices.

Since April, Vietnam has halved the environmental protection tax placed on petrol and oil by VND2,000 and VND1,000 per litre, respectively.

However, retail petrol and oil prices have continued to climb, forcing policymakers to consider a further environmental protection tax cut. The Ministry of Finance has also submitted a proposal to the Government to axe a further VND1,000 per litre placed on petrol and a further VND500 per litre on oil.

Despite this proposal, some economic experts say that such tax cuts will not help much, and lowering the excise tax and value added tax will be more positive move.

According to experts, taxes make up more than 30% of the retail price of a litre of petrol. Among them are the 10% import tax, the 10% excise tax, and the 10% value added tax.