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Petrolimex proposes lower petroleum import tariffs   2009-09-23 - Viet Nam Net

Petrolimex, which now has 60 per cent of the domestic market, suggests Viet Nam needs to set tariffs of up to five per cent on petroleum imports instead of current levels of up to 40 per cent.


Bui Ngoc Bao, general director of Petrolimex, says petroleum products for domestic consumption are now coming from both imports and domestic sources instead of just relying on imports as before. Therefore, Viet Nam should consider applying a new taxation scheme for new circumstances.


Previously Viet Nam had to import 100 per cent of all petrol.  However, the Dung Quat oil refinery can now meet 30 per cent of the market’s demand.


According to Petrolimex, it would be unreasonable to maintain the high import tariff which means domestic oil refinery benefits from “protection”.


He believes high import tariffs won’t encourage domestic oil refineries to have competitive production costs.  In addition, in the longer term, the petroleum supplies could fall short with imports unable to compete with domestically made products.


Bao believes the import tariff should be kept at a low level saying that the 0-5 percent tax range would be more reasonable than the currently applied 0-40 percent.


Petrolimex also thinks the currently applied taxation method of setting the percentage on CIF price (cost, insurance, freight) has become unreasonable, suggesting a fixed tax instead.


Deputy Head of the Price and Market Research Institute under the Ministry of Finance Vu Dinh Anh agrees with the proposal, adding the fixed tax scheme would ensure stable collection while boosting enterprise initative.


Deputy Director of Tax Policy Department Nguyen Van Phung under the Ministry of Finance also backs the proposal. However Phung warns that it would be very difficult to convert the percentage tax rate into a fixed tax.

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