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From July 1, environmental taxes imposed on minerals will increase by three to four percent. Specifically, the import duty on opencast coal will jump to 12 percent while the duty on pit coal will also rise to 10 percent.
Nguyen Van Bien, deputy director of Vinacomin, said that environmental tax hikes will increase the company’s costs by VND1.3 trillion ($58 million) to 1.5 trillion VND ($67 million) per year, threatening its profit margin.
Bien added that at present, environmental taxes in other countries are falling, while the rates in Vietnam are some of the highest in the world. In Australia, opencast coal is levied a seven-percent duty and it’s just six percent for pit coal, but Vietnam’s rates are double that.
“Our coal products are as good as our foreign competitors, but higher environmental taxes will make prices higher and reduce our competitiveness,” Bien said.
The deputy director said that higher costs caused by additional tax will affect other areas like incomes, jobs and social security in mining regions.
To cope with the increased costs, Vinacomin has cut off coal output for the first six months of the year in an attempt to reduce its inventory. However, in the long term, it will be difficult for the company to reach its profit target, Bien said.
Last year, Vinacomin saw year-on-year increase of three percent in revenue to reach VND106.8 trillion ($4.8 billion), but its profit fell to VND600 billion ($27 million). This year, the company hopes to reach 110 trillion (nearly $5 billion) in revenue and one trillion in profit ($45 million).
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