Navigating Vietnam Environmental Protection Tax: What You Need to Know in 2025

An environmental protection tax is imposed on goods that harm the environment to promote sustainable practices. This article covers which goods are taxed, the tax rates, who is responsible for paying, and recent changes in Vietnam’s policy.

Understanding Vietnam Environmental Protection Tax

The Environmental Protection Tax in Vietnam is an indirect collected tax levied on goods that pose a threat to the environment, aiming to shift the economy towards more sustainable practices. Taxing goods like fossil fuels, coal, and certain plastic bags, which can harm the environment if misused or improperly disposed of, encourages businesses and consumers to choose eco-friendly alternatives.

Goods subject to this tax include a wide range of products known to cause environmental damage. Fossil fuels like gasoline, aviation fuel, diesel, kerosene, and fuel oil are all covered, alongside various types of coal, such as brown coal and anthracite coal.

Additionally, products containing HCFC solutions and specific types of plastic bags made from HDPE, LDPE, and LLDPE, except those used for pre-packaged goods, are also taxable.

The primary objective of the Environmental Protection Tax is to reduce the usage of these environmentally detrimental goods, thereby minimizing their negative impacts. This tax not only generates revenue for environmental initiatives but also serves as a deterrent against the overuse of harmful substances, promoting a more sustainable way of living and conducting business.

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Taxable Goods and Rates

The environmental protection tax rates vary depending on the type of good. For instance, plastic bags are taxed at a rate of USD 1.98, a figure that has been compared to international standards and is subject to ongoing reforms. This significant rate highlights the government’s commitment to reducing plastic waste, a major global environmental concern.

The tax is also applied to various restricted-use pesticides and herbicides, which can have long-lasting effects on the environment. Vietnam targets these specific goods to mitigate their harmful effects on ecosystems and public health.

Tax Rate for Gasoline in Vietnam

As of now, the tax rate for gasoline in Vietnam stands at USD 0.079 per liter, excluding ethanol. This rate is part of the broader strategy to reduce the consumption of fossil fuels and promote cleaner energy solutions. Increasing gasoline prices aims to motivate individuals and businesses to opt for more sustainable transportation options.

This taxation policy aims to reduce environmental pollution and aligns with Vietnam’s long-term net-zero emissions goals. The revenue generated from this tax is often reinvested into environmental protection projects, further supporting the country’s sustainability efforts.

Who Pays the Environmental Protection Tax?

The responsibility for paying the environmental protection tax in Vietnam falls primarily on producers, importers, and entrusted sellers of taxable goods. These entities are required to account for the tax in their pricing structures, ultimately passing the cost on to consumers.

This mechanism ensures that those who contribute to environmental degradation are also financially responsible for mitigating its impacts.

Producers and importers of taxable goods bear direct responsibility for the environmental protection tax. Handling goods that fall under the taxable category requires compliance with tax regulations. This includes accurately documenting the quantity and type of goods produced or imported to facilitate proper tax calculation, import tax declaration, and payment.

In cases where goods are imported on behalf of another party, the responsibility for paying the environmental protection tax lies with the person who entrusted the importation. This ensures that all taxable goods, regardless of entry point or import method, are subject to the same tax obligations, maintaining market fairness.

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Calculation of Environmental Protection Tax

Calculating the environmental protection tax in Vietnam is straightforward but requires meticulous accuracy. The formula used is the quantity of taxable goods multiplied by the absolute tax amount per unit of goods. This method ensures the tax burden proportionately reflects the environmental impact of the taxed goods.

The tax basis includes the number of taxable goods and the absolute rate assigned to each type of good. For domestically produced goods, the quantity is determined based on the amount produced, sold, consumed, or donated. This approach ensures that all aspects of production and distribution are accounted for in the tax calculation method.

For coal, specific rules apply where the principal procurers must pay the environmental protection tax if they cannot provide proof of prior tax payment. This prevents tax evasion and ensures that all taxable goods contribute their fair share to environmental protection efforts.

Payment and Declaration of Environmental Protection Tax

The process of paying the environmental protection tax and declaring the environmental protection tax is designed to be flexible and accessible. Taxpayers can declare their environmental protection fees through various methods, including in-person submission, postal service, or electronically if the necessary infrastructure is available. This flexibility ensures compliance and ease of paying environmental protection tax for all entities involved.

The total environmental protection fee comprises a fixed component and a variable component based on emissions. The fixed fee for emissions is set at USD 119.05 per year, while the variable fee is calculated by summing the fees for each type of pollutant released. This dual-component system reflects both the inherent environmental impact of certain goods and the actual emissions produced.

Payments can be made non-cash into a collecting organization’s bank account or the State Treasury. Late payments are subject to additional charges as per tax management laws, emphasizing the importance of timely compliance. Tax authorities play a crucial role in guiding taxpayers through the payment and refund processes, ensuring adherence to tax administration laws.

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Environmental Protection Tax Refunds

The tax administration agency accepts tax refund claims submitted in the following ways:

• in person at the agency
• by mail
• electronically via the agency’s e-transaction portal

Taxpayers eligible for environmental protection tax refunds include producers and importers of plastic packaging for pre-packed goods. To qualify for a refund, these entities must accurately complete their declarations and commitments, ensuring that all necessary information is provided. This accuracy is crucial for maintaining the integrity of the refund process.

To initiate a paid tax refund, taxpayers must submit a written request along with proof of tax payments and additional tax declaration. This process ensures that only those who have genuinely paid the tax and meet the eligibility criteria can receive a refund. Necessary documentation may include customs dossiers, contracts, and other commitments related to the packaging.

The refund process is designed to be thorough yet fair, ensuring that all eligible taxpayers can recover their funds while maintaining strict compliance with the tax regulations. This system not only provides financial relief but also reinforces the importance of accurate tax reporting and administration.

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Recent Developments in Vietnam’s Environmental Protection Tax

Recent developments in Vietnam’s environmental protection tax policy reflect the government’s ongoing commitment to enhancing environmental sustainability.

Extension of Reduced Fuel Tax Rates Through 2025

To support economic recovery and control inflation, the National Assembly Standing Committee extended reduced EPT rates on fuels until December 31, 2025, under Resolution 60/2024/UBTVQH15. The rates are:​

• Gasoline (excluding ethanol): VND 2,000 per liter​
• Diesel, jet fuel, fuel oil, lubricants: VND 1,000 per liter​
• Kerosene: VND 600 per liter​
• Grease: VND 1,000 per kilogram​

These rates are set to revert to higher levels in 2026 as per Resolution 579/2018/UBTVQH14.

New Regulations on Emission Fees (Effective January 2025)

Decree No. 153/2024/ND-CP, effective from January 5, 2025, introduces environmental protection fees on industrial emissions. Key points include:​

• Applicability: Facilities discharging dust and industrial emissions requiring environmental licenses.​
• Fee Structure: A fixed fee of VND 3 million per year plus a variable fee based on emission volume and type.​
• Payment Schedule: Quarterly for facilities with emission monitoring; annually for others.​
• Collection Authority: Designated by provincial People’s Committees, either the Department or Office of Natural Resources and Environment.​

This regulation aims to encourage businesses to manage emissions effectively and adopt cleaner technologies.

Vietnam’s Commitment to Net-Zero Emissions

Vietnam’s commitment to achieving net-zero emissions by 2050, announced at the CoP26 conference in Glasgow, marks a significant milestone in the country’s environmental policy. This ambitious goal involves a comprehensive strategy that includes promoting investments in cleaner energy technologies and reducing greenhouse gas emissions by 9% using domestic resources and by 27% with international support by 2030.

As part of this strategy, Vietnam plans to expand its wind and solar power generation capacity to between 31-38 gigawatts by 2030. The country also aims to halt deforestation by 2030 and eliminate coal power generation by 2040. These initiatives highlight Vietnam’s dedication to reducing its carbon footprint and mitigating the environmental impacts of traditional energy sources.

The Environmental Protection Tax plays a pivotal role in funding these initiatives, providing the financial resources necessary to support the country’s transition to a sustainable economy. Aligning tax policy with environmental goals helps Vietnam take significant steps toward a greener future.

Impact on Foreign Firms

Foreign firms operating in Vietnam must navigate the complexities of the environmental protection tax to ensure compliance and manage their operational costs effectively. Understanding these tax obligations is crucial for foreign businesses, as non-compliance can lead to significant financial and legal repercussions.

Compliance with Vietnam’s environmental tax regulations can be challenging due to the intricate and evolving nature of local tax laws. Foreign firms need to stay informed about any changes in tax policy and adapt their business practices accordingly. This involves regular consultation with local tax authorities and legal experts to ensure adherence to all regulatory requirements.

The impact of increased taxes on non-biodegradable materials is a particular concern for foreign firms producing such goods in Vietnam. These businesses must evaluate their production processes and consider sustainable alternatives to mitigate the financial impact of the new tax rates, which can lead to negative environmental impacts. This helps them remain competitive while contributing to Vietnam’s environmental goals.

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How InCorp Can Help?

Vietnam is always updating its environmental tax rules, showing its dedication to a sustainable future. Businesses operating in Vietnam need to stay informed and adjust to these changes to succeed and contribute to the country’s environmental efforts.Incorp Vietnam guides businesses through these regulations. We help you understand the tax requirements, ensure correct calculations and declarations, and keep you updated on any changes. With Incorp Vietnam, you can manage your environmental tax obligations effectively and support Vietnam’s sustainability goals. Contact Incorp Vietnam to learn how we can assist with your Environmental Protection Tax compliance.