The Ministry of Finance has just completed the draft Resolution of the National Assembly Standing Committee on environmental protection tax rates for gasoline, oil and grease.

ENVIRONMENTAL PROTECTION TAX FLOOR REDUCTION

Notably, the Ministry of Finance strongly proposed an additional reduction of 500-1,000 VND/liter of environmental protection tax on gasoline and oil (depending on the type), in order to stabilize the domestic gasoline price in the face of fluctuations in world gasoline prices. world, helping to control inflation.

According to the Ministry of Finance, according to the Law on Environmental Protection Tax, the adjustment of this tax rate for gasoline falls under the authority of the National Assembly Standing Committee and there is still room to adjust the environmental protection tax rate for gasoline. , oil, grease. 

Regarding the effect, in case the Resolution is issued in July 2022, it will take effect from August 1, 2022 to the end of December 31, 2022.

It is expected that if the Resolution is passed, the reduction of environmental protection tax on gasoline, oil and grease will contribute to reducing production costs, lowering product prices, thereby helping businesses increase resilience. and business expansion.

Then, from January 1, 2023, the environmental protection tax rate for gasoline, oil and grease will continue to comply with Resolution No. 579/2018/UBTVQH14.

"If including the estimated reduction in state budget revenue according to Resolution 18/2022/UBTVQH15 of about 2,661 billion VND/month, the total reduction in average state budget revenue per month is estimated at 4,061 billion VND/month and for the whole year is about 20,305 billion VND", calculated by the Ministry of Finance.

With such expected consumption output, if the policy of reducing environmental protection tax rates on gasoline, oil and grease is applied as proposed above, it is estimated that the average monthly state budget revenue will be reduced (inclusive). including value added tax (VAT) reduction of about 1,400 billion VND/month. 

In case the Resolution is issued in July 2022 and takes effect from August 1, 2022, it is estimated to reduce state budget revenue (including VAT) by about VND 7,000 billion.

According to the Ministry of Finance, petroleum is an essential commodity in people's lives and an input for many production industries, so the fluctuation of petrol price will affect many objects in the economy. Therefore, reducing the environmental protection tax rate on gasoline regardless of the subject of application will support the economy and the people.

For the people, these are the beneficiaries who will directly benefit, the reduction of environmental protection tax rates on gasoline, oil, and grease will contribute to reducing the prices of these items, thereby, directly reducing costs. costs of people in consuming gasoline, oil, grease as well as reducing indirect costs from other consumer products.

In particular, petroleum is an input fuel for most manufacturing industries in the economy, especially the lifeline industries such as transportation, electricity, etc. Currently, fuel costs account for about 30 percent. - 40% of the cost structure of air transport; from 35-40% of the transportation cost for container trucks, heavy trucks and about 25% for other vehicles.

ADJUSTMENT UP THE FULL PRICE 12 TIMES FROM THE EARLY OF THE YEAR 

Explaining the above proposal to reduce the environmental protection tax floor, according to the Ministry of Finance, from the beginning of 2022, the world price of crude oil and finished petroleum products tend to increase. 

Specifically, the average crude oil price from January 1, 2022 to the end of June 13, 2022 for WTI was US$100.96/barrel, an increase of 58.49% compared to the beginning of the year. For Brent oil, the average price reached $103.80/barrel, up 54.77%.

Along with that, the average price of a number of world petroleum products traded on the Singapore market also increased sharply. At the operating period on June 13, 2022, the price of finished petroleum products fluctuated from 41.36 to 84.34% compared to the operating period on January 11, 2022.

Under pressure from fluctuations in world gasoline prices, from the beginning of 2022 until now, domestic retail gasoline prices have been adjusted 15 times. In which, the price of gasoline increased by 12 times and decreased by 3 times (including 2 reductions after reducing the environmental protection tax rate on gasoline, oil and grease according to Resolution No. 18/2022/UBTVQH15). At the most recent adjustment period on June 13, 2022, domestic gasoline prices set the highest level in history.

According to the Ministry of Finance, with the world crude oil price still remaining above 100 USD/barrel, the retail price of gasoline in Vietnam is likely to continue to increase in the near future, causing negative impacts on the economy. negative impact on the economy due to the high cost of raw materials and transportation costs, including gasoline.

Is there still room to reduce VAT, SPECIAL CONSUMPTION TAX?

Facing the "dizzying" increase in gasoline prices, a series of economic experts and many National Assembly deputies spoke strongly in the parliament about the need to further adjust and reduce taxes on petroleum products, without stopping. in the environmental protection tax in Resolution No. 18/2022/UBTVQH15, in order to reduce negative pressure from petrol prices on people's lives and help businesses reduce difficulties.

Ms. Nguyen Thi Viet Nga, Delegation to the National Assembly of Hai Duong province, said that gasoline prices in the world market continue to be complicated and are currently standing at a high level. Therefore, it is necessary to have measures to reduce gasoline taxes to support people and businesses during this time.

Accordingly, the tax structure in gasoline prices can be adjusted for import taxes, special consumption taxes, VAT and environmental protection taxes.

Before this issue, the Ministry of Finance explained, first, for import tax, comply with international commitments, within the framework of a number of FTAs, the FTA tax rate for gasoline is being implemented in Vietnam. is 8% for gasoline and 0% for oil, ensuring compliance with tax reduction commitments under FTAs. 

Therefore, the Ministry of Finance proposes not to adjust FTA tax rates for petroleum products within the framework of FTAs ​​and to comply with the current commitment schedule.

As for the preferential import tax (MFN), Decree No. 57/2020/ND-CP dated May 25, 2020 of the Government stipulates that the MFN tax rate for gasoline is 20%; for diesel, fuel oil, kerosene and jet fuel it is 7%.

In order to diversify gasoline supply, avoid being passive by depending on import sources from Korea and ASEAN, and at the same time, ensure the difference in line with the tax rates according to the FTAs ​​that Vietnam has signed, the Ministry of Finance main research and development of a draft Decree on the Export Tariff and the Preferential Import Tariff which is being sent for comments from ministries, branches, localities and enterprises.

Accordingly, the Ministry of Finance proposed to reduce the MFN tax rate for gasoline from 20% to 12%, keeping the difference of 4% compared to the FTA tax rates from Korea and ASEAN.

"The adjustment of the MFN tax rate on gasoline, although it may not have much impact on reducing the domestic gasoline price because currently gasoline is mainly imported from ASEAN and Korea, it will contribute to diversifying gasoline supply. from other countries such as China, the United States and countries in the Middle East, avoiding too much dependence on a few partners like now in case the supply in the world market fluctuates," the report said. stated by the Ministry of Finance.

Secondly, for excise tax, according to the provisions of the Law on Special Consumption Tax, only excise tax is collected on gasoline, no tax on oil of all kinds. The excise tax rate for gasoline is 10%, gasoline E5 is 8% and gasoline E10 is 7%. The Law on Special Consumption Tax does not provide for tax reduction for taxable goods and services.

The Ministry of Finance said that the special consumption tax is an indirect tax, levied on a number of goods and services that the State discourages consumption because it is harmful to health (tobacco, alcohol, beer, etc.). ). Gasoline is a fossil-based, non-renewable fuel that needs to be used sparingly, so according to international practices, it is always subject to special consumption tax.

International experience shows that most countries in the world collect excise taxes on gasoline.

For example, France 0.6629 EUR/liter for E10 gasoline and 0.6829 EUR/liter for mineral gasoline; Cambodia tax rate of 25%; Laos imposes a tax rate of 39%... The special consumption tax rate for Vietnam's gasoline is currently low on average compared to other countries.

On the other hand, "at present, only gasoline products are subject to excise tax, so if the excise tax reduction for gasoline products is implemented, it is not really effective and has not achieved the goal of reducing excise tax. Tax is to help reduce input costs for production and business activities, and to curb inflation because oil is the main commodity for production and business activities," the Ministry of Finance affirmed. 

Moreover, in terms of competence, the adjustment to excise tax falls under the competence of the National Assembly, so it must be submitted to the National Assembly for consideration and decision and often cannot be applied immediately, while gasoline prices have significant fluctuations. The time fluctuates fast, the time is short, so there will be a certain delay.

Third, for VAT, the VAT law does not provide for tax reduction or exemption for goods and services subject to VAT, but only stipulates the application of VAT on taxable goods and services. VAT with 3 tax rates.

Petroleum products are subject to a 10% VAT rate similar to many other groups of goods and services. In terms of competence, the adjustment to VAT falls under the competence of the National Assembly, so it must be submitted to the National Assembly for consideration and decision.

Previously, when submitting to the National Assembly for promulgation Resolution No. 43/2022/QH15 dated 11/01/2022, the Government proposed a reduction of VAT from 10% to 8% for goods subject to 10% tax. That includes gasoline. However, the National Assembly decided not to reduce the VAT rate for items subject to excise tax (including gasoline) and refined petroleum.

Therefore, the Ministry of Finance proposes not to make adjustments to reduce VAT and special consumption tax for petrol and oil in the immediate future.

However, the Ministry of Finance will coordinate with relevant agencies to continue monitoring petroleum price movements in the world and will submit to the Government for submission to the National Assembly a plan to reduce VAT and special consumption on gasoline. appropriate oil, in the form of a Resolution of the National Assembly in case gasoline prices continue to increase, unpredictable fluctuations, affecting the supply of petrol and oil, but it is necessary to continue to reduce taxes on petroleum products to contribute curb inflation.

According to the Ministry of Finance, in order to reduce gasoline prices, it is basically possible to use tax policy adjustment solutions. However, this is a temporary solution, should only be applied in the short term because domestic gasoline prices are volatile and depend mainly on world gasoline prices.

Instead, in order to limit the impact of world petroleum price movements on the domestic market, it is necessary to ensure proactive and stable supply of petroleum from domestic exploitation and production. 

According to the Ministry of Finance, currently, compared with many countries in the world, the proportion of tax in the price of gasoline sold in our country is still lower than the general average, especially after the environmental protection tax rate is adjusted. adjusted according to Resolution No. 18/2022/UBTVQH15.

Accordingly, the tax proportion for E5RON92 gasoline is about 23.46%, for RON95 gasoline is about 24.11% and for diesel oil is about 12.77% as of June 13, 2022.

The proportion of tax in the selling price of gasoline in many countries is mainly in the range of 40 - 55% for gasoline and 35 - 50% for oil, except for some countries with large oil reserves where the proportion is lower. Specifically, the tax share in India's gasoline price is 55% and 50% for oil; Korea is 55% with gasoline and 46% with oil; Britain is 45% for gasoline and 44% for oil; the EU27 average is 43% for gasoline and 38% for oil...