Environmental protection tax on fuels cut to zero to curb rising energy costs

Environmental protection tax on fuels cut to zero to curb rising energy costs

Following the tax cuts, domestic retail fuel prices dropped significantly from March 26, without using the price stabilisation fund.

Domestic fuel prices were cut sharply from midnight March 26 following a temporary reductio on the environmental protection taxes. — VNA/VNS Photo Trần Việt

Temporarily cuts to environmental protection taxes on gasoline (excluding ethanol), diesel and jet fuel to zero will take place from midnight on March 25 through April 15 in a bid to stabilise domestic energy prices amid global market volatility, according to a decision signed by the Prime Minister Phạm Minh Chính.

The special consumption tax on gasoline is also reduced to 0 per cent. Gasoline, diesel and jet fuel will not be subject to value-added tax (VAT) declaration or payment, though input VAT will remain deductible.

The Government said that the decision is an urgent response to ensure national energy security and ease pressure on production, business and consumption.

Tensions around the Strait of Hormuz have rattled global energy markets, pushing crude oil prices above US$100 per barrel and driving up fuel costs worldwide.

The government estimates the tax cuts could reduce state budget revenues by about VNĐ7.2 trillion ($283 million) per month but said the move would help earn the cost burden on businesses and residents.

Following the cuts, the ministries of industry and trade and finance sharply reduced domestic retail fuel prices from March 26, without using the price stabilisation fund.

RON95-III gasoline prices were capped at no more than VNĐ24,332 per litre, down VNĐ5,625, while E5RON92 fell by VNĐ4,749 to VNĐ23,326 per litre. Diesel prices were reduced by VNĐ2,459 to VNĐ35,440 per litre.

The Government said it would report to the National Assembly by March 30 on broader plans to adjust fuel taxes, with a draft resolution expected to be submitted during the meeting in April. 

Bizhub