A worker checks the sale volume at a fi lling station in HCMC. The big fuel price gap between Vietnam and its neighboring countries has given rise to fuel smuggling - Photo: Minh Tam
Fuel traders said the Ministry of Finance’s decision to reduce fuel import tax is not a radical solution as global prices have been surging while price stabilization funds are being exhausted.
Under Circular 25/2012/TT-BTC signed by Deputy Minister of Finance Vu Thi Mai on Tuesday, import tax has been slashed for petrol and oil products. In particular, the motor vehicle gasoline such as RON 97 and RON 90 along with jet fuel will be tax-exempt, instead of being imposed a 4% tax rate as before.
Meanwhile, diesel oil for autos will be levied a reduced tax rate of 3% against the previous level of 5%. The import tax rate remains unchanged at 5% for crude oil, grease and lubricants.
This decision of the finance ministry is aimed at containing retail price hikes after applying the import tax rate of 4% for two months while the global fuel prices were dropping.
A92 gasoline now retails for VND20,800 per liter, A95 for VND21,300 and diesel oil 0.5S for VND20,400. Such prices have been unchanged since August last year.
The new taxation measures are trivial compared to the oil price hike, traders said.
Fuels marked up strongly early this month in Singapore, according to Vietnam National Petroleum Corporation (Petrolimex). Petrol prices hit the highest level in nine months, with the price of US$129.85 per barrel recorded on February 13.
With the old import tax rates, fuel trading companies suffered a loss of VND700-1,000 for every petrol liter sold, and a loss of VND600-700 for each liter of oil. Discount for sales agents are accordingly pulled down to VND350-400 per liter, with transport costs included.
A fuel trader said Circular 25 cannot help remove the difficulties for enterprises as well as settle the current problems on the fuel market. He stressed enterprises still incur losses from the import shipments prior to the release of Circular 25.
In addition, he said the price stabilization fund of his company is running out as revenues fail to make up for expenditures.
Recently, the smuggling of fuels tends to increase due to the price difference of VND5,000 per liter between Vietnam and its neighboring countries China and Cambodia.
Fuel traders said the most appropriate measure is to gradually adjust up fuel prices to world levels.
The Saigon Times Daily
