The Ministry of Finance (MoF) announced its intention to cut the environmental protection tax on petrol by half, or VND2,000 per liter, and VND1,000 on diesel.

Environmental protection tax for petrol products is set to be halved. Photo: Cong Hung

The move, scheduled to take place in early April until late 2022, is part of a draft Government resolution on adjusting environmental protection tax for petrol and diesel products under the instruction of Prime Minister Pham Minh Chinh.

Under the move, the final retail price of fuels would see a reduction of VND2,200 per liter (including the value-added tax) and VND1,100 for diesel.

Such a reduction would be twice the cut previously proposed by the MoF and result in a decline of VND29 trillion (US$1.27 billion) in state budget revenue.

Economists called the move an essential solution to mitigate impacts from a potential shock of skyrocketing prices of petrol products on the local economy.

A report from the Vietnam Chamber of Commerce and Industry (VCCI) noted petrol prices have now reached an all-time high, but would continue to be on the upward trend, due to the escalating tension in Europe and economic sanctions being imposed.

Meanwhile, a tax cut is feasible at the moment, given Vietnam is among the beneficiaries of rising crude oil prices and positive state budget revenue in the first two months of 2022.