The Vietnamese government has decided to extend the reduction of import tariffs, environmental taxes, and value-added tax (VAT) on fuel until the end of the year, rather than ending the policy on September 30. This extension was formalized in Resolution 43, issued on September 30, which allows for a continued reduction of these taxes to zero for an additional three months.

Specifically, the preferential import tax, environmental tax, and VAT on fuels will remain at 0%. However, the special consumption tax on gasoline will still be applied as per the Special Consumption Tax Law, with current rates set at 10% for conventional gasoline, 8% for E5, and 7% for E10.

This policy was initially set to last until the end of September in response to the complex developments arising from the Middle East conflict. The government's decision to further reduce fuel taxes comes amid ongoing fluctuations in global oil prices and potential risks in the energy market due to this conflict. Even if the conflict were to resolve quickly, it would take time to restore oil extraction capacity and infrastructure, making rapid decreases in oil prices unlikely.

The Ministry of Finance previously indicated that if the tax incentives were to expire in October, the return to normal fuel tax levels would lead to increased retail fuel prices. This increase would subsequently raise transportation, logistics, and production costs, impacting everyday living expenses.

With the average Consumer Price Index (CPI) rising by 4.45% over the past eight months, the continuation of tax reductions is expected to alleviate pressure on prices and inflation in the fourth quarter. Additionally, maintaining a 0% MFN tax rate will enable businesses to diversify their supply sources beyond ASEAN, reducing reliance on traditional markets.

According to the resolution, if necessary, the Ministry of Industry and Trade, in collaboration with the Ministry of Finance, will propose adjustments to the application period based on the developments in the fuel market and macroeconomic management requirements.