VINACHEM

The Ministry of Industry and Trade has proposed the Ministry of Finance seek approval from the Government and National Assembly Standing Committee to halt the environmental protection tax on plastic bags to help struggling enterprises.

Since the law on environmental protection tax took effect early this year, the ministry has received big outcries from industry associations.

The ministry said the new legislation spelled trouble for exporters in the first quarter.

It is hard to identify what plastic bags are subject to the tax, so a large number of enterprises do not know whether or not this tariff applies to their products.

Moreover, the tax threshold does not specify different levels between environmentally friendly plastic bags and conventional ones, throwing both firms and tax agencies into a disarray over tax calculation and declaration.

The Ministry of Industry and Trade has asked the Ministry of Natural Resources and Environment to propose amendments and supplements to the law to deal with the issues in question.

When the law came into force in January, the plastics industry saw output and revenue dropping 35% year-on-year, and thus laid off 20% of the labor force, according to the Vietnam Plastics Association (VPA).

VPA reports a tax level of VND40,000 per a kilo of plastic bags has attracted a strong objection from member enterprises as it pushes product prices higher.