MoF refuses to cut tax rates for coal industry

Hanoi (VNS/VNA) – The Ministry of Finance has refused to reduce tax rates for
the coal industry, citing the fact that tax reduction is beyond the
Government’s authority.

In a report sent to the Prime Minister, the finance ministry said that the
Prime Minister had approved a development plan for the coal sector to ensure
reduction of coal exports and export of kinds of coal for which the domestic
market does not have a demand. He approved a plan on exporting two million
tonnes of coal per year for the period of 2017-20.

Coal has had many kinds of tax rates, ranging from 10 percent to 45 percent.
The coal export tariff stands at 10-15 percent. Anthracite coal, with an export
tax rate at 10 percent, is the lowest under the National Assembly’s tax rate
frame.

Therefore, the coal industry’s proposal on cutting the rate under 10 percent is
beyond the authority of the Government as well as the Prime Minister, the
ministry said.

Under the Law on environmental protection, environmental protection tax rate
for coal is between 10,000-30,000 VND per tonne.

According to Resolution 1269 issued by the Standing Committee of the National
Assembly, the environment protection tax rate is 10,000 VND per tonne of brown
coal and coking coal and 20,000 VND per tonne of anthracite coal. These rates
are the lowest level allowed by National Assembly’s regulations, reported
vietnamnet.vn.

The National Assembly had not proposed to adjust those tax rates as part of the
amended Law on environmental protection that is scheduled to be proposed at the
National Assembly’s October session this year, the ministry said.

The cut of those taxes is also beyond the Government’s authority, according to
the ministry, which cited China’s environmental protection tax rate of 25,600-118,400
VND per tonne of coal.

The highest natural resource tax for coal is 20 percent under the Law on
Natural Resource Tax but in fact, the tax stands at between 10-12 per cent.
Those rates are reasonable to ensure enough supply of coal for domestic power
production, according to the ministry.

According to the Vietnam National Coal, Mineral Industries Holding Corporation
Limited (TKV), the corporation reported an inventory of 9.5 million tonnes of
coal in the first five months of this year. It was estimated to decrease to
8.45 million tonnes in the first half of the year.

Therefore, the ministry has proposed that the Government increase import tax rate
for coal from zero to 3 percent or to 5 percent to cut further the inventory to
acceptable level, helping solve existing difficulties in production and
business of the coal industry.

TKV said 2016 was the most difficult year since it was established, especially
when the domestic market had strong growth of coal imports to 12.6 million
tonnes. However, the imports have dropped since early 2017, due to rising
global coal prices.

The finance ministry reported that import demand for large coal consumers on
the local market, especially electric producers, is expected to be higher in
the future. The demand for coal imports is likely to reach 11.7 million tonnes
in 2017, 40.2 million tonnes in 2020, 70.3 million tonnes in 2025 and 102
million tonnes in 2030.-VNA



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