Adjustment on environmental protection tax for plastic bags and petroleum

	Tax policy for processed goods for export production when re-importing
	No tax exemption or tax refund if enterprises do not manufacture
	Detecting and handling 15,489 violations of Customs administration

The Law on environmental protection tax should be amended and supplemented.

Accounting for 4.1% of total revenues

According to the Ministry of Finance, the collection of environmental protection tax in the last 5 years has improved accountability and social awareness of the environment; encouraged the production and consumption of environment-friendly products, thereby meeting the requirements of sustainable economic development as well as promoting the economic development associated with pollution reduction.

In the period 2012-2016, the revenues from environmental protection tax continuously increased over the years. The total revenues of environmental protection tax in 2012 were 11,160 billion vnd, in 2013 were 11,512 billion vnd, in 2014 were 11,970 billion vnd, in 2015 were 27,020 billion vnd and in 2016 were estimated at 42,393 billion vnd. The revenues of environmental protection tax accounted for approximately 1.5% - 4.1% of the total State budget revenues and 0.3% - 0.9% of GDP annually.

The environmental protection tax is an indirect tax, applying to products which cause adverse environmental impacts. Accordingly, the environmental protection tax puts the costs of "polluting the environment" on the sale price of goods, so it will increase the price of products and goods subject to this tax.

The Ministry of Finance said that the collection of environmental protection tax contributed to environmental protection as well as encouraging people to use environmentally-friendly products; restricting the production and use of goods causing negative environmental impacts (such as gasoline, oil, coal, emissions of carbon, sulfur, HCFC causing greenhouse effects, depletion of the ozone layer and climate change), thereby meeting the requirements of sustainable economic development associated with environmental protection.

Putting the “tax on plastic bags" into the Law

However, according to the Ministry of Finance, the Law on environmental protection tax should be amended and supplemented about the taxable objects, time of tax calculation and tax rates to better fit the environment protection as well as overcome some current obstacles and shortcomings.

The authorities will regulate that plastic bags are subject to environmental protection tax. The current Law on environmental protection tax only stipulates general provisions related to plastic bags, which causes many problems in the identification of taxable plastic bags. In order to solve this problem, the Government issued Decree No. 69/2012/ND-CP regulating that plastic bags are subject to tax and put this provision in the Law on Environmental Protection Tax to enhance the legality.

In addition, the current Law only regulates that fossil gasoline is subject to environmental protection tax, not including ethanol gasoline (E100), bio-gasoline (E5, E10 - containing 5%, 10% of ethanol respectively). Thus, the current Law on environmental protection tax has shown a trend of encouraging the use of biofuel.

Meanwhile, the absolute rates of environmental protection tax are provided on the basis of the fixed amount for each taxable goods. Therefore, in order to further encourage the use of biofuel in line with the direction of the Prime Minister, the functional authorities should add biofuel into the Law on Environmental Protection Tax to create a bigger gap between the price of normal fuel and biofuel.

Regarding the environmental protection tax rate, the Ministry of Finance said that the adjustment of the tax rate was necessary to contribute to further improving accountability and awareness of organizations and individuals in the process of environment protection as well as promoting the production and consumption of environmentally-friendly goods.

In the draft Law, the Ministry of Finance has proposed to adjust the minimum tax rate for plastic bags to be equal to the current tax rate; and the maximum tax rate is 2 times the current tax rate. This means the new tax level of 40,000-80,000 vnd per kg will replace the current tax level of 30,000 – 50,000 vnd per kg.

For petroleum, oil and gasoline, the minimum tax rate for plastic bags will be equal to the current tax rate and the maximum tax rate will be 2 times the current tax rate. Thus, the new tax level of gasoline, except for ethanol will be 3,000-8,000 vnd per liter, the new tax level of jet fuel will be 3,000-6,000 per liter, the new tax level of diesel will be 1,500-4,000 vnd per liter; and the new tax level of E5 and E10 will be 2,700-7,200 vnd per liter and 2,500-6,800 vnd per liter respectively. In particular, the tax level of oil still remains unchanged because oil is an essential commodity to serve the majority of the ethnic minorities in remote areas.

Currently, the Law stipulates that the tax of gasoline is 1,000 - 4,000 vnd liter with a common level of 3,000 vnd per liter. The tax of jet fuel is 1,000 - 3,000 vnd per liter with a common level of 3,000 vnd per liter.

A Tax officer is not permitted to perform the entire procedure on sale and issue of retail invoices VCN- The General Department of Taxation has signed a dispatch to request not to permit a Tax ...

The draft Law is expected to be submitted to the Government in June 2017, to the Standing Committee of the National Assembly in August 2017 and to the National Assembly in October 2017.