What is environmental protection tax? 09 goods subject to environmental protection tax in Vietnam

What is environmental protection tax? 09 goods subject to environmental protection tax in Vietnam (Internet image)

1. What is environmental protection tax?

According to Clause 1, Article 2 of the Law on Environmental Protection Tax 2010, environmental protection tax means indirect-collected tax, collected on products and goods (hereafter referred to as goods) when used to cause negative environmental impacts.

2. Goods subject to environmental protection tax in Vietnam

Specifically, in Article 3 of the Law on Environmental Protection Tax 2010, goods subject to environmental protection tax include:

- Gasoline, oil, grease, including:

= Gasoline, except ethanol;

= Aircraft fuel;

= Diesel oil;

= Petroleum;

= Fuel oil;

= Lubricants;

= Grease.

- Coal, including:

= Lignite;

= Anthracite Coal (anthracite);

= Fat coal;

= Other coal.

- Hydrogen-chlorofluorocarbon liquid (HCFC).

- Taxable-plastic bag.

- Herbicide which is restricted from use.

- Pesticide which is restricted from use.

- Forest product preservative which is restricted from use.

- Warehouse disinfectant which is restricted from use.

- When it is necessary to supplement other taxable objects as per period, the National Assembly Standing Committee shall consider and regulate.

3. Environmental protection taxpayers in Vietnam

The following subjects must pay environmental protection tax:

- Environmental protection tax payers include organizations, households and individuals producing and importing taxable goods specified in Article 1 of this Circular.

- Environmental protection tax payers are defined in some cases as follows:

= Entrusted importers shall pay environmental protection tax, regardless of the form of entrustment and of whether goods are exported and delivered to entrusting parties or entrusted parties.

= Producing and processing organizations, households and individuals that are concurrently entrusted to sell goods into the Vietnamese market shall pay environmental protection tax. In case processing organizations, households and individuals are not entrusted to sell goods, processing-ordering organizations, households and individuals shall pay environmental protection tax when selling goods in Vietnam.

= Organizations, households and individuals that act as principal procurers of coal exploited on a small and scattered scale but fail to produce documents evidencing that environmental protection tax has been paid for the goods shall pay tax.

(Article 3 of Circular 152/2011/TT-BTC)

4. Bases for calculation of environmental protection tax in Vietnam

Environmental tax bases include quantity of taxed goods and specific tax amount.

* The quantity of taxed goods

The quantity of taxed goods is specified as follows:

- For domestically produced goods, it is the quantity of produced goods which are sold, exchanged, used for internal consumption, donated, or used for sales promotion or advertising.

- For imported goods, it is the quantity of imported goods.

In case the quantity of goods subject to environmental protection tax sold and imported is calculated in a unit of measurement other than the unit of tax calculation specified in the Environmental Protection Tariff issued by the National Assembly Standing Committee, the former unit must be converted into the latter for tax calculation.

- For mixed fuel containing petrol, oil or grease of fossil origin and bio-fuel, the quantity of taxed goods in a period is the quantity of petrol, oil or grease of fossil origin contained in the quantity of mixed fuel imported or produced which is sold, exchanged, donated or used for internal consumption, converted into the unit of measurement specified for tax calculation applicable to relevant goods. The method of determination is as follows:

Pursuant to competent agencies' technical standards on processing of mixed fuel (even in case of change in the percentage (%) of petrol, oil or grease of fossil origin contained in mixed fuel), taxpayers shall themselves calculate, declare and pay environmental protection tax for the quantity of petrol, oil or grease of fossil origin; and concurrently notify tax offices of the percentage (%) of petrol, oil or grease of fossil origin contained in mixed fuel and submit such notices together with tax declaration forms of the month following the month in which mixed fuel is sold (or which sees change in the percentage of petrol, oil or grease of fossil origin contained in mixed fuel).

- For multi-layer nylon bags produced or process from HDPE, LDPE, LLDPE membrane, and other kinds of plastic membrane (PP, PA,…) or other substances such as aluminum or paper etc., the environment protection tax are calculated by the proportion of HDPE, LDPE, LLDPE in the multi-layer nylon bags. Depending on the amount of HDPE, LDPE, LLDPE used in the production of multi-layer nylon bags, the producer or importer of multi-layer nylon bags must make declaration and bear responsibility for their declaration.

* Specific tax amount

Specific tax amount used as a basis for calculating environmental protection tax for each kind of goods is the tax amount specified in the Environmental Protection Tariff issued together with the National Assembly Standing Committee's Resolution No. 1269/2011/NQ-UBTVQH 12 of July 14, 2011.

(Article 5 of Circular 152/2011/TT-BTC, supplementing Article 3 of Circular 159/2012/TT-BTC)

Thanh Rin

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