Parliament approves tax relief on gasoline, diesel and aviation fuel to zero through the end of June

All taxes on gasoline, diesel, and aviation fuel—including the environmental protection tax, value-added tax (VAT), and the special consumption tax—have been reduced to zero through June 30.

On the morning of April 12, the National Assembly passed a resolution on the environmental protection tax, VAT, and the special consumption tax on gasoline, diesel, and aviation fuel.

Scope of the tax reduction

The environmental protection tax on gasoline (excluding ethanol), diesel, aviation fuel, kerosene, and mazut is reduced to zero. The special consumption tax on various types of gasoline is also reduced to zero.

Gasoline, diesel, and aviation fuel are not required to declare or pay VAT, though input VAT may still be deductible. Businesses and importers of gasoline and oil products (diesel, kerosene, mazut) and aviation fuel are not required to declare or pay VAT at sale or at the import stage.

The policy applies from April 16 to June 30.

Government adjustment mechanism

In emergencies, the government may adjust the duration of the policy (shorten or extend) and report to the National Assembly at the next session.

Rationale and fiscal impact

According to the Ministry of Industry and Trade, in the base price structure of fuel, VAT accounts for about 7.4%; environmental protection tax 2.7–6%; and the special consumption tax 6.7%. Reducing these taxes to zero through June is intended to help meet this year’s socio-economic development targets and curb inflation.

Previously, the environmental protection tax, VAT, and the special consumption tax on gasoline (excluding ethanol), diesel, and aviation fuel were already set to zero under Prime Minister Decision 482, applicable through April 15. That decision was issued under the Government Organization Law for emergency cases. Under the earlier arrangement, kerosene and mazut still incurred environmental protection tax of 600 dong and 1,000 dong per liter or kilogram, while VAT remained at 10%.

The government estimates that zeroing these taxes will reduce monthly budget revenue by about 7.3 trillion dong. It said the measure is a special fiscal policy applied in a special context to mitigate energy price volatility and help stabilize macroeconomic conditions and social security.

Energy price context

The government cited the Middle East conflict’s impact on global energy markets, including Vietnam, where energy prices have risen sharply. Since the end of February, domestic fuel prices have undergone 15 adjustment rounds.

Current prices are reported at 23,540 dong per liter for gasoline RON 95-III and 32,960 dong for diesel. Earlier, these fuels had temporarily risen to nearly 34,000 dong and 45,000 dong per liter, respectively.

Measures to manage fuel prices

The government has issued measures to manage fuel prices to support people and businesses, including using the Price Stabilization Fund and adding 8,000 billion dong from the budget to pre-allocate for this fund.