Risk of shortage of gasoline and oil supply
The Ministry of Finance has just requested opinions to appraise the draft Decree amending the preferential import tax rate (MFN) for some types of gasoline, oil and raw materials for gasoline and oil production. The draft decree is built according to simplified order and procedures.
According to the Ministry of Finance's report, in the context of the world situation being unstable, conflicts in the Middle East have caused energy prices, especially oil and gas, to fluctuate sharply. The supply of gasoline and oil shows signs of disruption, world crude oil prices tend to increase, starting to affect the domestic gasoline and oil supply and market.
The Ministry of Finance said that the conflict between the US, Israel and Iran has strongly impacted the gasoline and oil business situation in Vietnam as well as in the world.
Currently, the Hormuz Strait is blockaded by Iran, making it impossible for about 20 million barrels of crude oil per day from Middle Eastern countries to pass through this shipping route to refineries, especially in Asia.
This situation has forced many oil refineries in Asia to cut capacity, open crude oil reserves and limit or stop exports of gasoline and oil products. The scarcity of product supply has pushed up gasoline and oil prices in the Singapore market, increasing the risk of supply shortages.
Similarly, some domestic refineries are also facing difficulties when the supply of imported crude oil is at risk of shortage, leading to the possibility of not being able to fulfill existing delivery contracts.
Suppliers in the region are also considering making force majeure declarations if this situation persists, leaving refineries without enough crude oil to produce products.
Currently, the source of gasoline and oil imported into Vietnam mainly comes from ASEAN countries and South Korea with a common tax rate of 0% according to free trade agreements (FTAs). However, when the supply of gasoline and oil in the world market faces difficulties, purchasing finished gasoline and oil from these markets may also be affected.
If this situation persists, replacement import sources will be both scarce and overpriced, and may even not have goods to import. At that time, domestic supply will face difficulties, causing disadvantages for ensuring domestic supply and stabilizing gasoline and oil prices.
Proposal to reduce MFN tax rates from 10% to 0%
Faced with the above situation, the Ministry of Industry and Trade has proposed to adjust the MFN import tax rate for gasoline and oil items to 0% and send it to the Ministry of Finance for synthesis and completion of the draft Decree. The expected application time is until April 30, 2026.
According to the drafting agency, the promulgation of the Decree aims to ensure national energy security, diversify energy supply sources, and at the same time ensure the balance between the short-term energy demand and long-term energy reserves. The adjustment is also aimed at contributing to macroeconomic stability, serving the goal of "double-digit" economic growth.
The Ministry of Finance proposes to reduce the MFN tax rate from 10% to 0% for uncoated engine gasoline under HS codes 2710. 12. 21, 2710. 12. 22, 2710. 12. 24, 2710. 12. 25 and preparations used to blend engine gasoline such as naphtha, reformate under HS code 2710. 12. 80.
For some other fuels, MFN import tax is also proposed to be reduced from 7% to 0%. This group includes diesel fuel, fuel oils, aircraft engine fuel and kerosine.
Other groups of goods proposed to reduce MFN tax rates from 3% to 0% include xylen, condensate and P-xylen. Other cyclic hydrocarbons under HS code 2902. 90. 90 are proposed to reduce tax rates from 2% to 0%.
According to calculations by the drafting agency, the adjustment of tax rates is expected to reduce state budget revenue by about VND 1,024 billion, calculated according to import turnover in 2025.
It is expected that the Decree will take effect from the date of signing to the end of April 30, 2026. In case it is necessary to extend the application time, the Ministry of Industry and Trade will have proposals for the Ministry of Finance to preside over summarizing and submitting to the Government for promulgation a Resolution extending the effective time of the Decree.
