Environmental protection tax increase for petroleum products, coal and plastic bags

The government has introduced resolution Nr. 579/2018/UBTVQH14 to raise the environmental protection tax for petroleum products, coal and plastic bags from 1 January 2019. New taxes for various products are as follows:

• Anthracite coal – Increased from VND 20,000 (86 US Cents) to VND30,000 (1,3 USD) per ton;
• Other types of coal – Increased from VND 10,000 (43 US Cents) to VND 15,000 (65 US Cents) per ton;
• HCFC, ozone-depleting substances, greenhouse gases – Increased from VND 4,000 (17 US Cents) to VND 5,000 (22 US Cents) per kilogram;
• Plastic bags – Increased from VND 40,000 (1,72 USD) to VND 50,000 (2,2 USD) per kilogram;
• Gasoline – Increased from VND 3,000 (13 US Cents) to VND 4,000 (17 US Cents) per litre;
• Kerosene – Increased from VND 300 (1 US Cent) to VND 1,000 (4 US Cent) per litre; and
• Lubricants and Heavy fuel oil – Increased from VND 900 (3 US Cents) to VND 2,000 (9 US Cents) per litre.

In the last few years, import taxes on oil and petroleum products have reduced considerably due to Viet Nam’s tariff commitments leading to a reduction in state revenues and shifted imports. This has led the retail prices of oil and petroleum products in Viet Nam to fall below the prices of their neighboring countries. In the opposite, import value of oil and petroleum products reached new record highs.

Due to estimations by the Ministry of Finance, the tax increase will result in an increase in government revenue of 690 million USD per year. According to media reports, the government hopes that the tax hike will not only raise consumers’ environmental awareness, but also encourage the use of environmentally friendly alternatives such as E5 biofuels. Whether the additional revenue will be used to tackle environmental problems remains unclear, however.