Ministry of Finance: Remove budget "compensation" mechanism for Dung Quat oil refinery

According to the leader of the Ministry of Finance, the policy with Dung Quat Oil Refinery is not a preferential treatment, but Dung Quat's obligation to the State budget...

Dung Quat Oil Refinery.

The Ministry of Finance leader said that the upcoming adjustment of tax policy for Dung Quat Petrochemical Refinery as proposed by this enterprise is to put domestic enterprises on equal footing with foreign importers.

According to Deputy Minister of Finance Do Hoang Anh Tuan, since 2016, especially when the special preferential import tax rate between Vietnam and Korea took effect, the tax rate of gasoline has been reduced from 20% to 10%, creating a large difference between the normal import tax rate and the preferential import tax rate according to the special preferential rates of the FTA Agreements.

“We find Binh Son’s proposal completely necessary and reasonable, ensuring the principle of equality between products from domestic production facilities and imported goods. This also ensures a reasonable level of protection in accordance with international commitments when Vietnam participates in trade agreements,” said the Deputy Minister.

Expressing more clearly the viewpoint of the Ministry of Finance, Mr. Do Hoang Anh Tuan said that the implementation of recent policies for Binh Son is not at all preferential but is Binh Son's obligation to the State budget. Therefore, to fulfill this obligation, domestic producers must be equal to importers from Korea.

“The issue of equality here is not that Binh Son is important, but the equality I am talking about is the general equality of all products, including petroleum products produced by Binh Son. That means domestic products must also be treated equally as imported products” – Deputy Minister Do Hoang Anh Tuan emphasized.

The leader of the Ministry of Finance also said that after the Vietnam-Korea Agreement takes effect, waiting for the ASEAN-Korea Agreement to take effect, the Ministry of Finance will submit to the Government to amend the financial mechanism in accordance with the current market mechanism and ensure equality between domestic and foreign enterprises. Specifically, the Ministry of Finance will submit amendments in the direction that Binh Son fully performs tax obligations according to the Tax Laws, according to current State regulations and remove the mechanism that if the import tax falls below 7%, the State will compensate.

Previously, the Vietnam Oil and Gas Group (PVN) sent a document to the Government Office, the Ministry of Industry and Trade, the Ministry of Finance... "complaining" about the large inventory at Dung Quat Oil Refinery. Chairman of Binh Son Refining and Petrochemical Company Nguyen Hoai Giang had to admit that Dung Quat Oil Refinery will have to face the risk of having to close for a while.

Currently, the tax rate applied to diesel, jet fuel, etc. imported from ASEAN countries has been reduced to 10%, while the tax rate for ASEAN countries remains at 20%. In addition, when the FTA between Vietnam and Korea comes into effect, the import tax on gasoline will be reduced to 10%. This is the price pressure on domestic gasoline products.

“In the product structure of Dung Quat Oil Refinery, petroleum products account for more than 90% of the total products of the entire factory. Therefore, if these products cannot be consumed, it will seriously affect the safe operation of the factory, and the factory may stop production,” PVN’s report stated.

According to Infonet