The Ministry of Industry and Trade (MoIT) and the Ministry of Finance (MoF) have blamed each other for mistakes in the slow application of new petroleum import taxes. This has led to a tax difference which meant the public had to paid high petrol prices.

MoIT issued a document on March 23, claiming that the MoF had not answered questions related to the issue.

The petro import tax difference which meant the public had to paid high petrol prices

This followed a claim by head of the MoF's Head of Tax Policies Pham Dinh Thi who had told reporters that it was not his ministry but MoIT that had been responsible for issuing petroleum tax policies.

In the document, MoIT claimed that Thi did not understand the duties and functions of the two ministries regulated in Decree 83/2014/ND-CP issued in 2014. Both ministries were responsible for developing policies for the petroleum import tax and petroleum price management. So MoIT had fulfilled its duty and functions in line with Decree 83.

The MoIT document also pointed out that before March 21, when the new petroleum tax policy was issued; taxes on petroleum import were calculated based on the MoF's instructions. On December 3, 2015, the MoF released a document admitting their responsibility for the tax policy.

Commenting on this case, Economist Nguyen Tri Long said both ministries were responsible. The MoF wanted to shift the blame onto MoIT despite their joint responsibilities clearly regulated in Decree 83. Meanwhile, MoIT said that the old taxes on petroleum import were calculated based on the MoF's instructions, which was also not the whole story.

According to the Decree 83, if the two ministries don't reach an agreement on the petroleum tax and price policies, MoIT has to inform the government. However, the MoIT did not do this, and now are claiming they followed the MoF's instructions.

Diesel import taxes for products imported from ASEAN countries were cut to 5% in 2015 and to 0% from 2016 in accordance with ASEAN Trade in Goods Agreement. But Circular 78 issued by MoF and MoIT and Trade last May stated that the import tax for diesel and mazut stood at 10%. That means wholesalers imported their products at a lower tax rate but the customers continued to pay higher tax rates.

The Korea-Vietnam Free Trade Agreement, which took effect in December 2015, reduced the import taxes for products from South Korea to 10%, instead of the 20% for products imported from Singapore or Malaysia. Yet retail prices did not reflect that change.

Due to the tax difference, consumers were made to pay an additional USD17.7 million in taxes. Local petrol traders have been enjoying this tax difference since May 2015 after the issuance of a circular on diesel imported from ASEAN and petrol imported from South Korea.

Following public outrage, on March 21, Prime Minister Nguyen Tan Dung approved the calculation of petroleum import tax based on weighted average of the tariffs, taking into account Most Favoured Nation status and free trade agreements as the previous calculation was based on only favoured nation tariff.Ministries play blame game as public foot $17.7m petrol tax bill.

The Ministry of Industry and Trade (MoIT) and the Ministry of Finance (MoF) have blamed each other for mistakes in the slow application of new petroleum import taxes. This has led to a tax difference which meant the public had to paid high petrol prices.

MoIT issued a document on March 23, claiming that the MoF had not answered questions related to the issue.

This followed a claim by head of the MoF's Head of Tax Policies Pham Dinh Thi who had told reporters that it was not his ministry but MoIT that had been responsible for issuing petroleum tax policies.

In the document, MoIT claimed that Thi did not understand the duties and functions of the two ministries regulated in Decree 83/2014/ND-CP issued in 2014. Both ministries were responsible for developing policies for the petroleum import tax and petroleum price management. So MoIT had fulfilled its duty and functions in line with Decree 83.

The MoIT document also pointed out that before March 21, when the new petroleum tax policy was issued; taxes on petroleum import were calculated based on the MoF's instructions. On December 3, 2015, the MoF released a document admitting their responsibility for the tax policy.

Commenting on this case, Economist Nguyen Tri Long said both ministries were responsible. The MoF wanted to shift the blame onto MoIT despite their joint responsibilities clearly regulated in Decree 83. Meanwhile, MoIT said that the old taxes on petroleum import were calculated based on the MoF's instructions, which was also not the whole story.

According to the Decree 83, if the two ministries don't reach an agreement on the petroleum tax and price policies, MoIT has to inform the government. However, the MoIT did not do this, and now are claiming they followed the MoF's instructions.

Diesel import taxes for products imported from ASEAN countries were cut to 5% in 2015 and to 0% from 2016 in accordance with ASEAN Trade in Goods Agreement. But Circular 78 issued by MoF and MoIT and Trade last May stated that the import tax for diesel and mazut stood at 10%. That means wholesalers imported their products at a lower tax rate but the customers continued to pay higher tax rates.

The Korea-Vietnam Free Trade Agreement, which took effect in December 2015, reduced the import taxes for products from South Korea to 10%, instead of the 20% for products imported from Singapore or Malaysia. Yet retail prices did not reflect that change.

Due to the tax difference, consumers were made to pay an additional USD17.7 million in taxes. Local petrol traders have been enjoying this tax difference since May 2015 after the issuance of a circular on diesel imported from ASEAN and petrol imported from South Korea.

Following public outrage, on March 21, Prime Minister Nguyen Tan Dung approved the calculation of petroleum import tax based on weighted average of the tariffs, taking into account Most Favoured Nation status and free trade agreements as the previous calculation was based on only favoured nation tariff.