Import tax increase will be applied for PP. Photo vcp.org.vn

HCM CITY (Biz Hub)— Viet Nam will increase import taxes on polypropylene (PP) from zero to 1 per cent by 2014, 2 per cent by 2015 and 3 per cent by 2016.

The tax adjustments are mentioned in Circular No 107 recently issued by the Ministry of Finance.

The circular contains changes to preferential import tax rates on certain commodities that have been in force since September 26, 2013.

According to the Viet Nam Plastics Association (VPA), PP is one of three major raw materials used in producing plastic items, so households that make low-value utensils will suffer the most from the tax hike.

Domestic firms only turn out 150,000 tonnes of PP annually while local demand is 750,000 tonnes per year, forcing industry players to import 600,000 tonnes to make up for the shortfall, VPA reports.

Based on current import prices of $1,500 a tonne, enterprises will have to pay an extra VND500 billion to import the same volume when the tax rate is raised to 3 per cent.-VNS