Vietnam plans to reduce its environmental protection tax for greases, lubricants and other oil products, effective April 1 to Dec. 31 this year, according to an announcement by the country’s government on March 13.
The environmental tax rate for greases and lubricants would be cut by 50% – the rate on lubricants reduced to 1,000 dong (U.S. 4 cents) per liter and the rate on greases to VND 1,000 per kilogram.
The Ministry of Finance will propose that the government reduce the tax to cushion the negative economic impacts on domestic business from a surge in crude oil prices and the COVID-19 pandemic, the ministry said on March 10.
Other governments from Germany to Alberta, Canada, are also implementing or considering reductions of taxes on petroleum products because of sharp increases in line with the run-up in crude oil costs. When prices on goods are higher, lowering taxes on those goods can lessen the impact on consumers without cutting into tax coffers. Initially, Vietnam’s ministry planned to propose rate cuts for gasoline and greases ranging from VND 500 to VND 1,000 per liter or kilogram, depending on type. However, after consultations with other ministries and business associations, the ministry settled on a range of VND 700 to VND 2,000.