The Prime Minister directed the Ministry of Finance to consider the proposal of the Cement Association on cement clinker export tax.

The Government Office has just issued Official Dispatch No. 4788/VPCP-KTTH to the Ministry of Finance regarding export tax on cement clinker.

Previously, on June 18, the Vietnam Cement Association sent Document No. 35/VPHH to the Prime Minister reporting the results of the Conference on removing difficulties, promoting production and consumption of cement, steel and construction materials.

The Vietnam Cement Association believes that considering clinker not a subject to the Law on Value Added Tax and applying a 10% export tax rate on cement clinker is inconsistent with the Law on Value Added Tax.

This association proposed that the Government direct the amendment of the content of Decree 26/2023/ND-CP to remove cement clinker from Appendix I of this decree and apply a 0% export tax rate on cement clinker in the context of the current difficulties of the cement industry.

Accordingly, Prime Minister Pham Minh Chinh directed the Ministry of Finance to consider the recommendations of the Vietnam Cement Association in the process of receiving and finalizing the draft Decree amending and supplementing a number of articles of Decree No. 26/2023/ND-CP dated May 31, 2023 of the Government on Export Tariff Schedule, Preferential Import Tariff Schedule, List of goods and absolute tax rates, mixed tax, import tax outside tariff quotas in accordance with the provisions of the Law on promulgation of legal documents and the Government's Working Regulations.

The clinker export tax has increased to 10% since the beginning of last year, creating more difficulties for export activities, many markets have reduced imports of Vietnamese clinker.

In 2023, the entire cement industry exported more than 31.3 million tons of clinker and cement, equivalent to more than 1.32 billion USD, down 1.2% in volume and 4.1% in value compared to the same period in 2022.

The Ministry of Construction believes that value added tax on exported clinker still has many shortcomings. Clinker is currently subject to a 10% VAT when consumed domestically and is subject to input VAT deduction similar to cement products.

However, exported clinker is not a commodity subject to VAT, so input VAT is not deductible, and thus greatly affects clinker exports.

With the clinker export tax increased to 10% and the 10% VAT not deducted, Vietnam's clinker price lost its advantage by 20% compared to the clinker price of competitors in the market, resulting in businesses being unable to export.

Clinker and cement exports in the first 6 months of 2024 continued to be gloomy as export prices were lower than production costs.

According to data from the General Statistics Office, the entire cement industry exported 15.86 million tons, worth 620 million USD, the output was the same as the same period last year, but due to low export prices, foreign currency earnings decreased by 10.8%.

If the FOB price for clinker in 2022 averages 46 - 48 USD/ton, cement 51 - 53 USD/ton (depending on packaging specifications and cement grade), the average price in May 2024 will be only 31 - 32 USD/ton (equal to 67% compared to 2022); the average export price of cement will be 38 - 48 USD/ton (equal to 85% compared to 2022), bulk cement 36 - 37 USD/ton.

Vietnam's clinker export price is currently 100,000 - 200,000 VND/ton below production cost , while the export price of enterprises in the region is low, so domestic cement enterprises cannot compete.