Vietnam said on Friday that it plans to cut value-added tax on fuel and the special consumption tax to keep inflation below 4% this year.
This will either be a 50% cut in both taxes, or a 20% cut in value-added tax and a 50% cut in special consumption tax, the finance ministry said in a statement.
According to the ministry, tax collection would be reduced by between $312 million to $515 million, while the average consumer price index should be 0.1% to 0.15% lower if the new tax rates are in place for six months from November.
The move will follow this week’s decision by the central bank to raise policy rates and several previous cuts in taxes on fuels since March, including the environment tax and Most Favoured Nation tariff.
Vietnam reported gross domestic product growth of 7.7% in the second quarter this year, but like many of its neighbours is facing mounting inflationary pressure as prices of food and energy rise around the world.
- Reuters, with additional editing from Alfie Habershon