The Ministry of Finance (MoF) is planning to further cut the environmental protection tax on fuel and gas products by VND1,000 – the largest margin possible for this type of tax, until the end of this year.

A petrol station in Hanoi. Photo: The Hanoi Times

The move is part of a draft resolution of the National Assemby’s Standing Committee on the environmental protection tax on petroleum products, which would further cut the tax rate from VND2,000 to VND1000 per liter.

This would reduce retail fuel prices (including value-added tax) by a VND1,100 per liter.

According to the MoF, in case the resolution is approved in July, the tax cut would take effect in early August.

The ministry expected the cut would lead to a decline of VND1.4 trillion ($60.3 million) in state budget revenues per month, based on the presumption that the amount of petrol consumed in 2022 similar to the pre-Covid-19 period in 2019.

Overall, the state budget would forego a total of VND7 trillion ($302 million) for the whole year.

Since April 1, the Government has cut the environmental protection tax by half, taking the tax rate on petrol to around VND2,000 per liter, and VND1,000 on diesel and mazut.

The MoF noted a further cut in the environmental protection tax is necessary to curb the upward trend of petrol prices and cool down inflation.

In a recent discussion session at the National Assembly, many deputies have called for the Government to cut multiple taxes such as excise tax, import duty, and VAT on petroleum products amid the skyrocketing oil prices.

Petrol prices in Vietnam rose to a record high on June 13, with biofuel E5-RON92 reaching VND31,110 ($1.34) per liter and RON95 to VND32,370 ($1.39). The prices are set to go even higher in the next price review period to be conducted by the Ministry of Finance and Ministry of Industry and Trade tomorrow [June 21] by the addition of VND200-400 per liter.

On June 15, the average petrol prices on the Singaporean market continued rising with prices of RON92 standing at $151.6 per barrel, RON95 at $158.1, and diesel at $172.