Vietnamese fuel traders are seeing profits thanks to falling global oil prices, but a price cut has been ruled out in favor of bringing back import taxes.
According to a new finance ministry rule, effective Friday, diesel and kerosene are both subject to a 5 percent import tax. The zero tax rate on gasoline and mazut remains unchanged.
Fuel traders, however, are required to set aside VND100 of every liter of gasoline they sell for a price stabilization fund.
The Ministry of Finance confirmed that distributors have earned profits of up to VND700 per liter.
The new regulation came only a few days after local media reported that oil product traders are no longer posting losses because global oil prices have fallen sharply in the past month
On Thursday, VnExpress reported that the ministry was considering several options: raising import taxes, collecting more money for the price stabilization fund, or simply cutting prices.
But right from the beginning, a source from the ministry already said a price cut was the least preferred option.
Earlier this year, the government removed import taxes on fuel products to help keep retail prices stable. The import taxes for gasoline and diesel were cut to zero percent in January.
In February, the 2 percent import tax on mazut and kerosene was also dropped.
The tax cuts have led to tax revenue losses of VND20.1 trillion, the ministry said.
On Monday, Dam Thi Huynh, deputy director of Petrolimex, Vietnam's largest fuel supplier, said that retail prices should not be lowered for some time so that distributors can recoup their losses.