At a Petrolimex station in Vietnam. Photo courtey of Vietnam News Agency.

With these tax reduction options, the ministry estimates a decrease in budget revenue of approximately VND1,024 billion ($38.95 million).

The Ministry of Justice is currently reviewing a draft decree amending the Most Favored Nation (MFN) import tax rates for certain gasoline products and input materials.

In a document submitted to the Ministry of Justice for assessment, the finance ministry stated that the conflict in the Middle East has seriously affected the gasoline business in Vietnam and the world. Accordingly, the Strait of Hormuz is currently blockaded by Iran, preventing approximately 20 million barrels of crude oil per day from Middle Eastern sources from reaching refineries, especially in Asia.

The finance ministry predicts that if tensions in the Middle East persist, imported gasoline supplies could become scarce and prices could be driven up.

The drafting agency also stated that most of Vietnam's imported gasoline products come from ASEAN and South Korea, with the majority of tariffs being 0% under FTA commitments. However, given the global context, purchasing refined gasoline products from these sources will also face difficulties.

To address this, the finance ministry proposed reducing the MFN tariff rate from 10% to 0% for unleaded gasoline (such as RON 95) and gasoline blending materials. Simultaneously, it proposed reducing the MFN import tariff rate from 7% to 0% for diesel fuel, various types of fuel oil, aviation fuel, and other kerosene products.

In addition, some raw materials for blending gasoline and petrochemicals such as naphtha, reformate, and condensate are also expected to have their taxes reduced to 0%.

Vietnamese oil refineries Nghi Son and Binh Son will be able to supply enough gasoline in March due to inventories, but supply in April and May will reportedly depend on the Middle East conflict situation.