In response to the complex developments in the Middle East conflict, fuel taxes were previously reduced to 0 until 30/6. Government Resolution 34, issued on 30/6, extends the exemption period for most favored nation (MFN) import tax, environmental protection tax, and value-added tax (VAT) on fuel until 30/9. This represents an additional three months beyond the currently applied regulations.

However, the special consumption tax on gasoline will be reimposed from 1/7, specifically at 10% for mineral gasoline, 8% for E5, and 7% for E10.

The new resolution is effective from 1/7 until 30/9. If necessary, the Ministry of Industry and Trade may propose that the government adjust the implementation period to align with fuel market developments and macroeconomic management requirements.

A gas station in Hanoi, 28/5. Photo: Hoang Giang

The government's decision comes as global oil prices have cooled following a peace agreement between the US and Iran and the restoration of traffic through the Strait of Hormuz. However, the energy market still faces significant risks. The Ministry of Finance believes that the possibility of renewed conflict cannot be entirely ruled out, and global fuel supply remains affected by geopolitical factors.

Furthermore, the domestic fuel supply largely consists of existing reserves purchased at high prices. New imports, reflecting current market prices, typically experience delays due to negotiation processes between businesses and their import partners, as well as extended shipping times.

The Ministry of Finance estimates that domestic fuel prices could sharply increase by 43-67,2%, depending on the type, if fuel taxes (excluding the special consumption tax on gasoline) were immediately restored to pre-conflict levels. Such a move would likely add about 0,78 percentage points to this year's average consumer price index (CPI), undermining inflation control efforts.

According to the Ministry's assessment, under the plan to continue exempting fuel taxes until the end of September (excluding the special consumption tax on gasoline), E5 and E10 gasoline prices would increase by approximately 7-8%. Diesel prices, however, would remain largely unchanged.

Consequently, the average fuel price level would rise by about 5%, impacting the CPI by approximately 0,11 percentage points – significantly lower than the scenario of fully restoring all taxes. The state budget is projected to lose about 15.400 billion VND in revenue during the final three months of Q3.

The Ministry of Finance believes this approach balances the objectives of inflation control, ensuring energy supply, and gradually restoring budget revenue. Moreover, maintaining the 0% MFN tax rate allows key businesses to diversify supply sources beyond ASEAN, reducing dependence on a few traditional markets.

Phuong Dung