VCCI Suggests the Ministry of Finance Should Eliminate Special Consumption Tax on Gasoline

The Vietnam Chamber of Commerce and Industry (VCCI) has recently submitted a document to the Ministry of Finance providing feedback on the draft revised Special Consumption Tax Law. In the document, VCCI proposes that the drafting agency consider removing the special consumption tax on gasoline.

VCCI argues that gasoline is currently subject to two types of consumption-reducing taxes: the special consumption tax and the environmental protection tax.

'Gasoline is not a luxury item, so imposing a special consumption tax on it is also a form of environmental protection. Therefore, we recommend that the drafting agency consider removing this tax on domestic fuel. If necessary, the authorities could adjust the environmental protection tax to better align with its intended goals,' VCCI commented.

Currently, the special consumption tax rates are 10% for gasoline, 8% for E5 gasoline, and 7% for E10 gasoline; oil is not subject to this tax.

The price of RON 95-III gasoline is currently 22,880 VND, and diesel oil is 20,320 VND. Therefore, more than 2,000 VND per liter of gasoline consists of special consumption tax (price before VAT).

Additionally, each liter of gasoline sold is also subject to an environmental protection tax of 2,000 VND, E5 gasoline 1,900 VND, and diesel oil 1,000 VND.

VCCI has repeatedly proposed removing the special consumption tax on gasoline. However, the Ministry of Finance has stated that the special consumption tax on gasoline is appropriate and cannot be removed in the context of combating climate change and the commitment to achieve net-zero emissions by 2050.

Each year, Vietnam consumes about 25-26 million m³/tons of various types of gasoline and oil. According to data from the Ministry of Industry and Trade, in the first half of this year, the country consumed approximately 13.2 million m³/tons of gasoline and oil, a slight decrease compared to the first half of 2023.

In addition to the above proposal, VCCI also made suggestions regarding the special consumption tax on tobacco, sugary drinks, and beer and alcohol. The organization stated that it, along with businesses, agrees with the use of special consumption tax policies to protect public health and limit consumption of health-damaging items like alcohol, beer, and tobacco.

'However, we recommend that the drafting agency consider a more suitable timeline for increasing taxes on alcohol and tobacco in line with the business environment, prioritizing options with a more stable tax increase rate. Additionally, consider the impact of including soft drinks in the 10% tax category,' VCCI proposed.