Tran Thi Bich Ngoc, head of the Department of Administration Supervision on Tax, Fees and Charges under the Ministry of Finance (MoF), stated that current incentives for electric vehicles (EVs) in Vietnam are not lower than those offered in other countries in the region.

Bich Ngoc made the comments at a conference on reducing emissions in the automotive industry, hosted by VIR on August 29.

Tran Thi Bich Ngoc, head of the Department of Administration Supervision on Tax, Fees and Charges under the Ministry of Finance

“The MoF's policies moving forward will prioritise and support sectors that reduce carbon emissions, including promoting the development of EVs. This will be achieved through various tax, fee, and land rent policies aimed at boosting investment in manufacturing, assembly, and encouraging environmentally friendly vehicles,” said Ngoc.

For batteries, a list of high-tech industries prioritised for investment and high-tech products, including fuel cells and lithium batteries with high performance, large capacity, long lifespan, safety, and environmental friendliness, has been issued. All applicable taxes are currently set at the highest preferential rates.

Ngoc shared that the MoF has submitted a draft of the Law on Special Consumption Tax (SCT) to the government and National Assembly. Under this law, the SCT for EVs will be significantly lower, around 1-3 per cent until March 2027, after which it will increase to 4-7 per cent.

In contrast, fossil fuel-powered vehicles will be subject to a SCT of 35-150 per cent, depending on the vehicle type.

In addition, hybrid vehicles also receive significant incentives, though not as high as those for EVs. The law currently imposes a tax rate of 70 per cent compared to fossil fuel-powered vehicles of the same type. For vehicles running on biofuels, the tax rate is only half of that applied to gasoline-powered vehicles of the same type.

“Regarding the environmental protection tax, it only applies to petrol, oil, and grease derived from fossil sources, and not to those made from biofuels. Additionally, in the near future, the MoF will also consider registration fees for battery-electric vehicles,” said Ngoc.

In addition, automotive manufacturing and assembly enterprises that invest in areas with difficult or especially difficult socioeconomic conditions are exempt from import taxes on machinery and equipment used to create fixed assets for projects in these regions. Land taxes, corporate income taxes, and other taxes and fees are also offered at the highest preferential rates.

“These policies have been fully implemented. In the near future, the MoF will study ways to support both the public and businesses, as well as vehicle manufacturers, for both electric and hybrid vehicles,” she added.