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

In a report sent to the Prime Minister, the finance ministry said that thePrime Minister had approved a development plan for the coal sector to ensurereduction of coal exports and export of kinds of coal for which the domesticmarket does not have a demand. He approved a plan on exporting two milliontonnes 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 exporttax rate at 10 percent, is the lowest under the National Assembly’s tax rateframe.

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

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

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

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

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

The highest natural resource tax for coal is 20 percent under the Law onNatural 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 powerproduction, according to the ministry.

According to the Vietnam National Coal, Mineral Industries Holding CorporationLimited (TKV), the corporation reported an inventory of 9.5 million tonnes ofcoal in the first five months of this year. It was estimated to decrease to8.45 million tonnes in the first half of the year.

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

TKV said 2016 was the most difficult year since it was established, especiallywhen the domestic market had strong growth of coal imports to 12.6 milliontonnes. However, the imports have dropped since early 2017, due to risingglobal coal prices.

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