The Government has just issued a decree stipulating the import tax rate for gasoline products, with a reduction of 10 per cent on organic unleaded gasoline.

Decree No. 51/2022/ND-CP amends the preferential “Most Favoured Nation” or “MFN” rates for gasoline products, in which the import tax rate for unleaded petrol (under HS code from 2710.12.21 to 2710.12.29) will be adjusted from 20 per cent to 10 per cent.

According to the Ministry of Finance (MoF), compared to other countries, the proportion of tax in the base price of petroleum in Viet Nam is lower. The proportion in many countries was mainly in the range of 40 per cent - 55 per cent for gasoline and 35 per cent - 50 per cent for oil, while it was about 19.39 per cent for E5RON92 gasoline, 21.95 per cent for RON95 gasoline and about 11.05 per cent for diesel in Viet Nam with the environmental protection tax rate reduced.

MoF said gasoline products were imported from countries with FTAs with Viet Nam, so they had to bear import tax rates under the FTA, which was lower than the MFN import tax rate. According to the General Department of Customs, total import turnover with tax on petroleum products was US$475.26 million, of which imports from countries with FTAs accounted for 99.7 per cent in 2021, adding in the first five months of 2022, the total import turnover with tax on gasoline products was $826.53 million, mostly from countries with FTAs.

The portion of imported gasoline under the current MFN import tax rate was low, so the reduction of the MFN rate will not have a significant impact on state budget revenue.

Currently, global crude oil prices and Viet Nam's finished petroleum product prices were still high, negatively affecting the economy. An adjustment decree with the usual order and procedures could not ensure a timely solution amid the currently complicated petroleum market, therefore, the MoF reported to the Prime Minister for permission to separate the adjustment of preferential import tax rates for gasoline to issue a separate decree according to the simplified order and procedures so it can be applied immediately.

The ministry said that because petroleum was both a strategic and important commodity and an essential commodity, it had a strong impact on production, business activities and people's lives, adding to stabilise the macro-economy, the high gasoline prices and the shortage of petroleum supply will put great pressure on the production and business costs of enterprises as well as people's spending.

With the reduced rate, it still ensured room to negotiate new FTAs ​​in the future and would not create obligations of Viet Nam in international commitments, said MoF.

As for leaded and motor gasoline, which were no longer allowed to be produced and used, MoF proposes to keep the same tax rate, while for oil products was to apply the current rate of 7 per cent.

Currently, the FTA import tax rate for oil in the framework of the ATIGA with ASEAN countries and the FTA with Korea has been reduced to 0 per cent, so the import turnover under the MFN import tax rate was insignificant.

In the market, gasoline prices were forecast to return to more than VND23,000 per litre in the adjustment period until August 11 after reducing from VND1,000 to VND1,300 per litre.

In the previous operating period, E5 RON92 gasoline decreased by VND450 per litre, RON 95 gasoline decreased by VND470 per litre, diesel oil decreased by VND950 per litre, and kerosene decreased by VND710 per litre.

After the adjustment, E5 RON92 gasoline has a maximum selling price of VND24,620 per litre, RON95 gasoline was VND25,600 per litre, diesel oil was VND23,900 per litre, kerosene was VND24,530 per litre and fuel oil was VND16,540 per litre. — VNS