Vietnam adjusts import tariffs on selected petroleum products

The Ministry of Justice has recently received a proposal from the Ministry of Finance regarding amendments to the preferential import tariff rates applied to certain petroleum products and inputs used in fuel production. The document has also been submitted by the Ministry of Finance to the Ministry of Industry and Trade and the Government of Vietnam for consideration.

According to Deputy Minister of Finance Cao Anh Tuấn, the proposed adjustments to preferential import tariff rates stem from escalating geopolitical tensions, particularly the conflict involving the United States, Israel, and Iran, which have significantly affected the petroleum market both in Vietnam and globally.

The Strait of Hormuz is currently under blockade by Iran, preventing approximately 20 million barrels of crude oil per day—originating from major Middle Eastern producers such as Iran, Iraq, the UAE, Saudi Arabia, and Kuwait—from passing through the strait to refineries worldwide. The impact is especially significant in Asia, a region heavily dependent on crude oil supplies from the Middle East.

As a result, many Asian refineries have been forced to reduce operating capacity, tap into strategic crude reserves, and limit or suspend exports of refined petroleum products. The tightening supply has driven petroleum prices in the Singapore market sharply higher, including both MOPS and Premium prices, raising concerns about potential supply shortages.

Currently, several domestic oil refineries are also facing difficulties as the supply of imported crude oil risks being disrupted, making it challenging to fulfill existing delivery contracts. Regional suppliers are reportedly considering declaring force majeure should the situation persist, as refineries may not have sufficient crude oil to maintain production.

Most of Vietnam’s petroleum imports originate from ASEAN countries and South Korea, where import tariffs are largely 0% under existing free trade agreements (FTAs). However, under the current global circumstances, sourcing refined petroleum products from these markets may also become increasingly difficult.

Deputy Minister of Finance Cao Anh Tuấn emphasized that if the current situation persists—while alternative imports remain scarce and face significantly higher prices, or may even become unavailable—the domestic market could face serious supply constraints. This would create challenges for Vietnam in ensuring adequate fuel supply and maintaining price stability. Given the urgency of the situation, measures are needed to enable major petroleum distributors to diversify supply sources and mitigate potential disruptions.

Meanwhile, Deputy Minister of Industry and Trade Nguyễn Sinh Nhật Tân noted that on March 5, the Ministry of Industry and Trade had already submitted a proposal to the Ministry of Finance recommending that most-favored-nation (MFN) import tariffs on certain petroleum products be reduced to 0%. This proposal led the Ministry of Finance to submit a recommendation to the Government to issue a decree amending preferential import tariff rates for selected petroleum products and inputs used in fuel production, under the Preferential Import Tariff Schedule attached to Decree No. 26/2023/NĐ-CP, following an expedited legislative procedure.

Proposed Tariff Adjustments

MFN tariff reduced from 10% to 0%

• Unleaded motor gasoline (HS codes: 2710.12.21, 2710.12.22, 2710.12.24, 2710.12.25)

• Naphtha, reformate, and other preparations used for blending motor gasoline (HS code 2710.12.80)

MFN tariff reduced from 7% to 0%

• Diesel fuel and fuel oils (HS codes 2710.19.71, 2710.19.72, 2710.19.79)

• Aviation turbine fuel (HS codes 2710.19.81, 2710.19.82)

• Other kerosene products (HS code 2710.19.83)

MFN tariff reduced from 3% to 0%

• Xylene (HS code 2707.30.00)

• Condensate (HS code 2709.00.20)

• P-xylene (HS code 2902.43.00)

Additionally, other cyclic hydrocarbons (HS code 2902.90.90) would see the MFN tariff reduced from 2% to 0%.

The Ministry of Finance stated that the proposed policy would take effect from the date of issuance until April 30, 2026. Based on 2025 import turnover estimates, the adjustment is expected to reduce state budget revenue by approximately VND 1.024 trillion.

If necessary, the policy’s validity period may be extended. In such a case, the Ministry of Industry and Trade would submit a proposal to the Ministry of Finance for consolidation and presentation to the Government, which could then issue a resolution extending the effective period of the decree.

According to Tạp chí Pháp lý

Source: https://phaply.net.vn/sua-doi-muc-thue-suat-thue-nhap-khau-doi-voi-mot-so-mat-hang-xang-dau-a261450.html