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Vietnam Cuts Import Tariffs On Oil Products

by Mary Swire,, Hong Kong

16 April 2015

Vietnam's Ministry of Finance has reduced the import duty rates on certain petroleum products, so as to prevent a rise in domestic fuel prices when it raises environmental taxes in May this year.

Within its free trade agreements (FTA), particularly with other Association of Southeast Asian Nations members, Vietnamese import duty rates on petroleum products are already due to fall this year.

In addition, with effect from April 14, the Ministry has announced that the duties from non-FTA countries on gasoline and kerosene have been cut by 15 percent to 20 percent; on diesel by 10 percent to 20 percent; on fuel oil by 10 percent to 25 percent; and on aviation fuel by 15 percent to 10 percent.

Previously this year, the Ministry hiked duties on petroleum products significantly while global oil prices were falling, so that the Government could raise more tax revenue and reduce the country's fiscal deficit wherever possible. At the same time, Vietnamese consumers still experienced reduced retail prices due to even sharper falls in global oil prices.

However, it has been recognized that consumers will need some protection from the tripling of environmental protection taxes that will be imposed from May 1.

Those taxes will be increased to VND3,000 (USD0.14) from VND1,000 per liter for gasoline and jet fuel; to VND1,500 from VND500 per liter for diesel; and to VND900 to VND300 per liter for kerosene and fuel oil.

It is foreseen that, as import duties are cut further in future years due to Vietnam's international and FTA commitments, environmental protection tax increases will create a stable replacement source of tax revenue for the Government. They could also operate in furtherance of the Government's long-term targets in reducing pollution, especially by encouraging the increased use of biofuels through preferential rates.

TAGS: environment | Finance | tax | free trade agreement (FTA) | fiscal policy | aviation | tariffs | environmental tax | oil and gas | agreements | tax rates | import duty | retail | trade | Vietnam

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