The Vietnamese Ministry of Finance has proposed increasing the maximum levels of the environmental protection tax on gasoline, diesel oil, and lubricants in the tax frame and keeping the tax band on kerosene unchanged.
The proposal was included in a draft program to develop laws and ordinances in 2024 over which the Ministry of Justice is consulting relevant ministries and agencies.
In other words, the Ministry of Finance has proposed amending the Environmental Protection Tax Law.
In particular, the minimum environmental protection tax rates on fuels should be kept unchanged, while the maximum rates should be revised up to facilitate policy adjustments when needed.
The tax band on kerosene was proposed to be maintained as the product is an essential commodity for the poor and ethnic minority groups in remote areas.
In addition, the unit of heavy oil fuel was suggested to be changed from liter to kilogram to match the reality.
At present, the band for the environmental protection tax on petrol (except for ethanol) is VND1,000-4,000 (US$0.04-0.17) per liter; jet fuel, VND1,000-3,000 ($0.04-0.13); diesel oil, VND500-2,000 ($0.02-0.09); and kerosene, heavy fuel oil, lubricating oil, and grease, VND300-2,000 ($0.01-0.09).
The current tax rates on fuels (except for kerosene) are the highest in the tax frame.
However, from August 1, 2020 to December 31, 2022, the tax rates were cut to support enterprises amid the COVID-19 pandemic, contributing to keeping inflation under control.
The Ministry of Finance also cited studies to prove that the proportion of taxes in the selling prices of fuels in Vietnam remains lower than the average in many other countries in the world.
With the environmental protection tax on gasoline and diesel oil standing at VND4,000 ($0.17) and VND2,000 ($0.09) per liter, respectively, the tax will account for 31 and 18.7 percent of their prices if crude oil is priced at $90-100 per barrel.
Meanwhile, the proportion in many other countries is some 40-55 percent for petrol and 35-50 percent for diesel oil.
According to the Ministry of Finance, the tax frame amendment will help the country take the initiative in responding to global fuel price fluctuations and is in line with the global trend to increase taxes on fossil fuel products to realize the emission reduction commitment.
Once the global fuel prices surge, Vietnam just needs to apply the current minimum environmental protection tax rates on petrol, oil, and lubricants to help put inflation under control.
When the country cuts import tariffs as pledged or takes measures to achieve net-zero emissions by 2050 as committed at the UN Climate Change Conference (COP26) in 2021, it will raise the protection tax on petrol, oil, and lubricants.
The Ministry of Finance also suggested levying the tax on bio-fuel, or E5RON92, a mixture of 95 percent of RON 92 gasoline and five percent of ethanol.
According to the ministry, the regulation of not imposing the environmental protection tax on ethanol only fails to encourage the production, import, and use of biofuels to replace fossil fuels.
The environmental protection tax on bio-fuels should be preferential so that the total taxes on bio-fuels will be lower than the current taxes.
In addition, bio-fuels with a higher proportion of ethanol should be entitled to a lower environmental protection tax rate.
The Ministry of Finance proposed the government report its proposals to the lawmaking National Assembly at its sitting in October 2025 so that they can be approved in May 2026.
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The Vietnamese Ministry of Finance has proposed increasing the maximum levels of the environmental protection tax on gasoline, diesel oil, and lubricants in the tax frame and keeping the tax band on kerosene unchanged.
The proposal was included in a draft program to develop laws and ordinances in 2024 over which the Ministry of Justice is consulting relevant ministries and agencies.
In other words, the Ministry of Finance has proposed amending the Environmental Protection Tax Law.
In particular, the minimum environmental protection tax rates on fuels should be kept unchanged, while the maximum rates should be revised up to facilitate policy adjustments when needed.
The tax band on kerosene was proposed to be maintained as the product is an essential commodity for the poor and ethnic minority groups in remote areas.
In addition, the unit of heavy oil fuel was suggested to be changed from liter to kilogram to match the reality.
At present, the band for the environmental protection tax on petrol (except for ethanol) is VND1,000-4,000 (US$0.04-0.17) per liter; jet fuel, VND1,000-3,000 ($0.04-0.13); diesel oil, VND500-2,000 ($0.02-0.09); and kerosene, heavy fuel oil, lubricating oil, and grease, VND300-2,000 ($0.01-0.09).
The current tax rates on fuels (except for kerosene) are the highest in the tax frame.
However, from August 1, 2020 to December 31, 2022, the tax rates were cut to support enterprises amid the COVID-19 pandemic, contributing to keeping inflation under control.
The Ministry of Finance also cited studies to prove that the proportion of taxes in the selling prices of fuels in Vietnam remains lower than the average in many other countries in the world.
With the environmental protection tax on gasoline and diesel oil standing at VND4,000 ($0.17) and VND2,000 ($0.09) per liter, respectively, the tax will account for 31 and 18.7 percent of their prices if crude oil is priced at $90-100 per barrel.
Meanwhile, the proportion in many other countries is some 40-55 percent for petrol and 35-50 percent for diesel oil.
According to the Ministry of Finance, the tax frame amendment will help the country take the initiative in responding to global fuel price fluctuations and is in line with the global trend to increase taxes on fossil fuel products to realize the emission reduction commitment.
Once the global fuel prices surge, Vietnam just needs to apply the current minimum environmental protection tax rates on petrol, oil, and lubricants to help put inflation under control.
When the country cuts import tariffs as pledged or takes measures to achieve net-zero emissions by 2050 as committed at the UN Climate Change Conference (COP26) in 2021, it will raise the protection tax on petrol, oil, and lubricants.
The Ministry of Finance also suggested levying the tax on bio-fuel, or E5RON92, a mixture of 95 percent of RON 92 gasoline and five percent of ethanol.
According to the ministry, the regulation of not imposing the environmental protection tax on ethanol only fails to encourage the production, import, and use of biofuels to replace fossil fuels.
The environmental protection tax on bio-fuels should be preferential so that the total taxes on bio-fuels will be lower than the current taxes.
In addition, bio-fuels with a higher proportion of ethanol should be entitled to a lower environmental protection tax rate.
The Ministry of Finance proposed the government report its proposals to the lawmaking National Assembly at its sitting in October 2025 so that they can be approved in May 2026.
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