The government continues to reduce gasoline and oil taxes to zero until the end of September

In response to the complicated developments of the Middle East conflict, taxes on gasoline have been reduced to zero until June 30. Resolution 34 dated June 30 of the Government allows extending the exemption period of preferential import tax (MFN), environmental protection tax, and value added tax (VAT) on gasoline until September 30, which is an additional 3 months compared to the current regulations.

Particularly, the special consumption tax on gasoline will be collected again from July 1, specifically mineral gasoline at 10%, E5 8% and E10 7%.

NThe new resolution is effective from July 1 to September 30. If necessary, the Ministry of Industry and Trade proposes that the Government adjust the application time to suit petroleum market developments and macroeconomic management requirements.

This move was made by the management agency in the context of world oil prices cooling down after the US – Iran reached a peace agreement and restored traffic through the Strait of Hormuz, but the energy market still has many potential risks. The Ministry of Finance believes that the possibility of conflict re-erupting cannot be completely ruled out, while the global petroleum supply is still affected by geopolitical factors.

On the other hand, the amount of petroleum supplied on the domestic market is currently mainly reserved goods purchased in advance at high prices. Import sources at new prices often have delays due to the price negotiation process between businesses and import partners and long shipping times.

The Ministry of Finance estimates that domestic gasoline prices could increase sharply by 43-67.2% depending on type, if taxes on gasoline (except special consumption tax on gasoline) immediately restore to pre-war levels. At that time, this year’s average CPI is expected to increase by about 0.78 percentage points, affecting the goal of curbing inflation.

According to the Ministry’s assessment, with the plan to continue to exempt gasoline taxes until the end of September (except special consumption tax on gasoline), each liter of E5 and E10 gasoline will increase by about 7-8%. And diesel prices remained almost unchanged.

Thus, the average level of gasoline prices increased by about 5%, affecting CPI by about 0.11 percentage points – much lower than the scenario of restoring all taxes. The state budget is expected to reduce revenue by about 15,400 billion VND in the last 3 months of the third quarter.

The Ministry of Finance believes that this plan helps balance the goals of controlling inflation, ensuring energy supply and gradually restoring budget revenue. At the same time, maintaining 0% MFN tax also creates conditions for key businesses to diversify their supply sources outside of ASEAN, reducing dependence on some traditional markets.