Vietnam plans to cut import tax for LNG to 2%

Vietnam’s Ministry of Finance is drafting a decree on preferential import tax for some products, including a proposal of 2% tax rate for LNG.

The draft decree is part of the ministry’s efforts to implement the Prime Minister’s request of adapting to the global development to ensure macroeconomic growth and stability.

A key task for the finance ministry is to update the tax scheme for key partners, especially the United States - a comprehensive strategic partner of Vietnam.

The ministry clarified that the current import tax rate on LNG is 5%, per the most-favored nations (MFN) scheme, on par with Vietnam’s commitment with the World Trade Organization (WTO).

In line with other free trade agreements (FTA), the rate is 0%, except for 1.2% under the Europe-Vietnam FTA (EVFTA) and UK-Vietnam FTA (UKVFTA), 1% with the Vietnam-China FTA (VCFTA), and 5% with the ASEAN-Australia-New Zealand FTA (AANZFTA).

Besides, there is a 10% value added tax (VAT).

In the draft decree, the ministry suggested the tax rate can go down from 5% to 2% for LNG under the HS code 2711.11.00. The move can encourage the import of low-emission LNG, reduce the import cost, and help cut the price of LNG-fired power amid the growing demand for electricity.

The ministry estimates that the tax decrease can lead to a reduction of $3.2 million in tax revenue from LNG import.

Vietnam spent $150.3 million on importing LNG in 2024, including $96.5 million (64.23% of the total) per MFN tax and $53.7 million (35.77% of the total) per FTA tax.