Are products containing 95% of petroleum-based mineral oil subject to environmental protection tax in Vietnam?

Are products containing 95% of petroleum-based mineral oil subject to environmental protection tax in Vietnam?

According to the provisions specified in Official Dispatch 7833/TCHQ-TXNK of 2017 regarding environmental protection tax as follows:

"The General Department of Customs received the Official Dispatch No. 3107/DA/HQ dated July 31, 2017, from Dai A Industrial JSC, and No. 0107.2017/CV-TCHQ dated September 15, 2017, from Polyfill JSC requesting to determine the subject of environmental protection tax for imported goods used for production. Concerning this issue, the General Department of Customs has the following opinion:

Based on the provisions in Clause 1, Article 3 of the Law on Environmental Protection Tax No. 57/2010/QH12, Clause 1, Article 2 of Decree No. 67/2011/ND-CP dated August 8, 2011, of the Government of Vietnam, and Clause 1, Article 1 of Circular No. 152/2011/TT-BTC dated November 11, 2011, of the Ministry of Finance, gasoline, oil, and grease are subject to environmental protection tax, including: “Gasoline, excluding ethanol; Jet fuel; Diesel oil; Kerosene; Mazut oil; Lubricant oil; Lubricating grease.”

Gasoline, oil, and grease prescribed in this clause are fossil-based gasoline, oil, and grease (hereinafter referred to as fossil fuel) sold in Vietnam, excluding bio-products (such as ethanol, vegetable oil, animal fat...).

For mixed fuels containing biofuels and fossil fuels, environmental protection tax is only applied to the fossil fuel part.”

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Based on the opinion of the Ministry of Natural Resources and Environment in Official Dispatch No. 6156/BTNMT-TCMT dated November 13, 2017, on the application of environmental protection tax for white oil LP-250G, the white oil LP-250G product of Dai A Industrial JSC containing 95% ofpetroleum-based mineral oil, classified as heavy oil fraction, is subject to environmental protection tax under the current regulations.

Based on the regulations and opinion of the Ministry of Natural Resources and Environment:

1. In the case of Dai A Industrial JSC

The company imports white oil LP-250G (HS code 2710.19.90) for producing “filler masterbatch” and is informed by Customs Inspection Department 2 (Export-Import Goods Analysis and Classification Center - Hai Phong branch) with analysis result No. 736/TB-CNHP dated March 25, 2016, for the imported goods declared by the company as white oil used as processing aid, product code LP-250G is "A product containing 95% ofpetroleum-based mineral oil, classified as a heavy oil fraction," thereby identified as oil containing 95% ofpetroleum-based mineral oil and subject to environmental protection tax. The percentage (%) of fossil fuel contained in the mixed fuel is determined according to Section 1.3, Clause 1, Article 5 of Circular No. 152/2011/TT-BTC.

..."

Thus, based on the above provisions, a product containing 95% ofpetroleum-based mineral oil, classified as a heavy oil fraction, is determined to be oil containing 95% ofpetroleum-based mineral oil and is subject to environmental protection tax.

Are products containing 95% of petroleum-based mineral oil subject to environmental protection tax in Vietnam? (Image from the Internet)

What is the percentage of fossil-based oil in mixed fuels in Vietnam?

Based on the guidance provided in Official Dispatch 7833/TCHQ-TXNK of 2017, the percentage of fossil-based oil in mixed fuels is implemented according to point 1.3, clause 1, Article 5 of Circular 152/2011/TT-BTC, specifically:

- Based on the technical standards for processing mixed fuels approved by a competent authority (including changes in the percentage (%) of fossil-based gasoline, oil, and grease in the mixed fuel), taxpayers calculate, declare, and pay environmental protection tax for the quantity of fossil-based gasoline, oil, and grease.

- Concurrently, taxpayers are responsible for notifying the tax authority about the percentage (%) of fossil-based gasoline, oil, and grease contained in the mixed fuel, submitting it with the tax declaration of the following month when the sale (or change in percentage) of mixed fuel begins.

What is the method to calculate environmental protection tax for products containing 95% of petroleum-based mineral oil?

As prescribed in Article 4 of Circular 152/2011/TT-BTC on the method of calculating environmental protection tax for products containing 95% ofpetroleum-based mineral oil as follows:

The environmental protection tax payable is calculated according to the following formula: