HANOI: Vietnam cut import taxes levied on oil products from countries it does not have free trade agreements with, the Ministry of Finance said in a circular. Import tariffs on gasoline and kerosene have been cut to 20% from 35%, diesel to 20% from 30%, fuel oil to 25% from 35%, and to 10% for jet fuel from 25% previously.
The move is to avoid a sharp increase in domestic oil product prices once the country triples the environmental protection duty in May, according to the circular.On May 1, Vietnam will raise environmental protection taxes on oil products, the ministry said last month.
The tax will be raised to Dong 3,000 ($0.14)/liter from Dong 1,000/liter for gasoline and jet fuel, to Dong 1,500/liter from Dong 500/liter for diesel, and to Dong 900/liter from Dong 300/liter for kerosene and fuel oil.Since January 1, Vietnam has implemented separate import tariff structures on oil product imports based on whether the products come from countries it has FTAs with.
As for countries it has FTAs with, Vietnam has further levied different import tax rates over 2015-2018 under three agreements, namely: the ASEAN Trade in Goods Agreement (ATIGA), the ASEAN-China and the ASEAN-Korea FTAs.
Under the ATIGA, the import tariff on gasoline from ASEAN nations is at 20%, and at 5% for diesel, kerosene and fuel oil.Further out, Vietnam will remove the import tax on diesel, kerosene and fuel oil from 2016 and import tariff on gasoline from 2018.
Under the FTA with China, Vietnam’s import tax on gasoline is set at 20% for gasoline, 10% for jet fuel, 8% for diesel, and 10% for kerosene over 2015-2018.As for the FTA with South Korea, only diesel and kerosene are levied with a preferential import tax rate of 5% over 2015-2017, and this will be abolished from 2018.
As a result of the change in import tax rates, Vietnam saw a sharp increase in oil product imports from countries it has FTA agreements with over the first two months of the year, Vietnam Customs data showed.Imports from ASEAN nations Singapore, Thailand and Malaysia, as well as from China and South Korea rose 19.78% year on year to 1.19 million mt over January-February, accounting for 77.27% of the total oil product imports.
At the same time, oil product imports from Taiwan, Russia and Kuwait, which Vietnam does not have FTAs with, fell to 295,979 mt in the first two months, down 26.56% year on year and accounting for 19.22% of total imports.
