Reducing special consumption tax on gasoline to zero and cutting value-added tax by half will provide positive impacts amid global uncertainties, the Vietnam Chamber of Commerce and Industry (VCCI) proposed.
The current special consumption tax on gasoline is 10% with the same rate applied to value-added tax (VAT). The Ministry of Finance is proposing that the former tax is cut by half, and the latter by either 20% or 50%.
This means after the proposed cut, a liter of gasoline will be subject to a 5% special consumption tax and VAT of either 8% or 5% .
But the VCCI wants the special consumption tax to be scrapped altogether in case global gasoline prices surge unexpectedly.
Apart from the special consumption tax and VAT, gasoline in Vietnam is also subjected to imported and environmental taxes. The latter has been cut by 75% this year, the maximum reduction allowed by the Standing Committee of the National Assembly.
Some experts have said that the special consumption tax is not appropriate for gasoline as it only applies to goods or items not encouraged for use like tobacco, alcohol and luxury cars.
Gasoline, however, is a popular and essential commodity that should not be subjected to the special consumption tax.
The finance ministry’s proposal to cut both taxes is set to reduce government revenue by VND7.4-12.2 trillion ($311.9-513.2 million) for the second half-year.
RON95 gasoline price climbed to a peak in June before plunging to the current level of VND24,230 per liter, the lowest this year.
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