MoF proposes reductions for four types of taxes on petroleum products

The Ministry of Finance (MoF) has recently proposed a plan to reduce special consumption tax (SCT) for gasoline, value-added tax (VAT) for gasoline and oil products, and most-favored-nation tariff (MFN) for gasoline from 20 percent to 12 percent.
MoF proposes reductions for four types of taxes on petroleum products ảnh 1 The high petrol prices have hindered economic recovery. (Photo: SGGP)
Thus, along with the solution to cut the environmental protection tax rate for gasoline, oil, and grease products to the floor level in the tax bracket until December 31, 2022, and the solution to reduce the MFN tax rate, the MoF has continued to put forward more tax cuts to help lower gasoline and oil prices.

Up to now, the MoF has proposed to reduce four types of taxes on this essential product.

According to the MoF, it is crucial to slash the MFN tax rate to 12 percent for gasoline to diversify petroleum supply to avoid being passive by depending on import sources from South Korea and the ASEAN only.

Besides, people and businesses will directly benefit from tax reductions on gasoline and oil products, thereby contributing to directly reducing consumers’ expenses as well as indirect costs from other consumer products.

Previously, because petrol and oil prices have continuously climbed and are currently at the highest level in history, a new price level has been formed, with many goods and services increasing by 5-10 percent and some even jumping by 25-30 percent.

The above developments have adversely affected people's lives, especially the underprivileged groups, poor, and low-income people. At the same time, it also makes it difficult for manufacturing enterprises to recover production after the Covid-19 pandemic.

Budget revenue to decrease significantly

The MoF estimates that if the Resolution is issued in July 2022 and takes effect from August 1, 2022, State budget revenue will be reduced by VND7 trillion (US$300.37 million). If including the estimated reduction of about VND2.66 trillion ($114.14 million) per month in State budget revenue according to Resolution No.18/2022/UBTVQH15, the average decrease in State budget revenue is estimated at VND4.06 trillion per month and about VND20.3 trillion ($870.77 million) for the whole year.

By Luu Thuy – Translated by Da Nguyet

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