HCMC - Vietnam’s environmental protection tax on gasoline and other fuels will be reduced to zero, according to a resolution passed on April 12 by the 16th National Assembly to ease fuel cost pressures and stabilizing the domestic energy market.

Under the resolution, the environmental tax rate on gasoline (excluding ethanol used in biofuels), diesel oil, kerosene, heavy fuel oil and jet fuel will be set at VND0 per liter. The special consumption tax on gasoline will also be reduced to zero. Gasoline, jet fuel and other oil products will no longer be subject to value-added tax (VAT) declaration and payment at both the import and sales stages, while businesses will still be allowed to credit input VAT. The resolution will take effect from April 16 through June 30 this year. During this period, the National Assembly has authorized the Government to flexibly adjust the duration of the policy or modify tax rates in emergency situations to align with global oil price fluctuations. Other provisions not specified in the resolution will continue to follow prevailing tax laws. The exclusion of ethanol from the environmental tax reflects the nature of biofuels such as E5 RON 92 and E10. As ethanol is an environmentally friendly bio-based alcohol, tax policy has traditionally applied only to fossil fuels. With both the environmental protection tax and special consumption tax on fossil gasoline now reduced to zero, biofuel prices are expected to benefit from a dual reduction, helping lower retail prices at the pump.