The Ministry of Finance has proposed reducing the most-favored-nation (MFN) import tariff on several gasoline and fuel products, as well as raw materials used in fuel production, to 0 percent in order to diversify supply and stabilize the domestic market.

The ministry has submitted a draft decree amending preferential import tariff rates for certain gasoline, oil products and fuel production materials for appraisal. The draft is being developed under a streamlined legislative procedure.

According to the proposal, the Ministry of Finance noted that the global situation is experiencing significant instability. Ongoing conflicts in the Middle East have caused sharp fluctuations in energy prices, particularly oil and gas. Fuel supply chains are showing signs of disruption, while global crude oil prices are trending upward. These developments have begun affecting Vietnam’s domestic fuel supply and market.

The ministry stated that tensions involving the US, Israel and Iran have strongly impacted fuel trading activities both globally and in Vietnam.

Iran has blocked the Strait of Hormuz, preventing roughly 20 million barrels of crude oil per day from Middle Eastern sources from passing through the strait to refineries, particularly those in Asia.

As a consequence, many refineries in Asia have been forced to cut production capacity, draw on crude oil reserves and limit or suspend exports of refined petroleum products. The resulting shortage of supply has pushed fuel prices in the Singapore market sharply higher and increased the risk of supply shortages.

Similar to refineries across Asia, some domestic refineries in Vietnam are also facing difficulties as imported crude oil supplies risk becoming insufficient, making it challenging to fulfill existing delivery contracts.

Regional suppliers are also considering declaring force majeure if the situation persists and refineries cannot obtain enough crude oil to produce refined products.

Currently, most of Vietnam’s fuel imports come from ASEAN countries and South Korea with tariffs largely set at 0 percent under free trade agreements (FTAs). However, when global supply becomes constrained, purchasing finished fuel products from these markets may also become more difficult.

If the situation continues, replacement import sources may become scarce and significantly more expensive, or even unavailable. Such a scenario could complicate efforts to secure domestic fuel supply and stabilize prices.

For this reason, the Ministry of Industry and Trade has proposed adjusting the MFN import tariff on fuel products to 0 percent and submitted the proposal to the Ministry of Finance for consolidation and completion of the draft decree, with a proposed application period until April 30, 2026.

According to the drafting agency, issuing the decree would help ensure national energy security, diversify energy supply sources and balance immediate energy demand with long-term energy reserves. It would also contribute to maintaining macroeconomic stability and supporting the country’s target of achieving double-digit economic growth.

Proposal to cut MFN tariff from 10 percent to 0 percent

The Ministry of Finance proposes reducing the MFN import tariff from 10 percent to 0 percent for unleaded motor gasoline (HS codes 2710.12.21, 2710.12.22, 2710.12.24 and 2710.12.25) as well as fuel blending components such as naphtha and reformate (HS code 2710.12.80).

The MFN import tariff would also be reduced from 7 percent to 0 percent for diesel fuel, various fuel oils, aviation fuel and kerosene.

In addition, the proposal includes reducing the MFN import tariff from 3 percent to 0 percent for products such as xylene, condensate and p-xylene. Other cyclic hydrocarbons under HS code 2902.90.90 would see tariffs reduced from 2 percent to 0 percent.

According to estimates, the proposal could reduce state budget revenue by about VND1.024 trillion (approximately US$41.8 million) based on import turnover in 2025.

The decree is expected to take effect from the date of signing until April 30, 2026. If an extension is needed, the Ministry of Industry and Trade will propose that the Ministry of Finance compile and submit a proposal to the Government for a resolution extending the decree’s validity.

Nguyen Le