The policy of reducing the environmental protection tax on fuels has been in effect since 4/2022. Currently, this tax is reduced by 50%, equivalent to 2,000 VND per liter of gasoline (excluding ethanol) and 1,000 VND per liter of diesel. This policy is set to expire at the end of this year, after which the environmental protection tax on fuels will return to the ceiling rate from the beginning of 2026.

To ensure growth targets and contribute to stabilizing domestic fuel prices and the consumer price index (CPI), the Ministry of Finance proposes extending this policy until the end of next year. Accordingly, the environmental protection tax on gasoline (excluding ethanol) is expected to be 2,000 VND per liter; diesel, mazut, and lubricating oil, 1,000 VND per liter; lubricating grease, 1,000 VND per kilogram; and kerosene, 600 VND per liter.

For jet fuel, the proposed tax rate is 2,000 VND per liter, instead of the current preferential rate of 1,000 VND.

From 2027, the environmental protection tax is expected to return to the ceiling rate, as stipulated: gasoline (excluding ethanol), 4,000 VND per liter; jet fuel, 3,000 VND per liter; diesel, mazut, and lubricating oil, 2,000 VND per liter; kerosene, 1,000 VND per liter; and lubricating grease, 2,000 VND per kilogram.

A gas station attendant pumps fuel for a customer. Photo: Thanh Tung

A gas station attendant pumps fuel for a customer. Photo: Thanh Tung

The Ministry of Finance stated that maintaining the tax reduction policy in recent years has helped stabilize fuel prices and mitigate the negative impacts of global price fluctuations. This year, the tax reduction has also contributed to reducing tax costs in the retail structure, thereby lowering fuel prices.

Regarding jet fuel, the Ministry stated that implementing the environmental protection tax reduction policy helps reduce input fuel costs for the aviation industry and air transport enterprises.

Currently, the Vietnamese aviation market has essentially recovered. Therefore, the Ministry of Finance proposes setting the environmental protection tax at 2,000 VND per liter, a reduction of 1,000 VND compared to the stipulated tax rate. This is to continue supporting businesses and ensure fairness among other transportation sectors such as rail and road.

However, this will result in a decrease in state budget revenue, estimated at 40,835 trillion VND in 2024. In the first 4 months of this year, the revenue decrease was estimated at approximately 14,394 trillion VND (excluding the decrease in value-added tax revenue). Despite the budget reduction, the Ministry assesses that this will be a direct support from the government to help people and businesses recover, develop production and business activities, and promote socio-economic development.

Phuong Dung