Tax incentives for hybrid vehicles: A sustainable approach

Tax incentives for hybrid vehicles need to be expanded

Mr. Dao Cong Quyet - Head of the Communications Subcommittee of the Vietnam Automobile Manufacturers Association (VAMA) - said: The Special Consumption Tax Law does not distinguish between cars running on gasoline combined with electric power (also known as hybrid cars) with or without an external charging system.

VAMA proposes expanding tax incentives for hybrid vehicles. Illustrative photo

However, the implementation process has a big problem, that is, only hybrid vehicles with an external charging system enjoy preferential special consumption tax, while hybrid vehicles without an external charging system do not enjoy preferential special consumption tax and are still subject to the same tax rate as gasoline vehicles.

This is creating a policy dilemma, as both hybrid vehicles save fuel and reduce emissions, but are not treated equally in terms of tax rates.

According to VAMA's proposal, hybrid electric vehicles that do not require external charging (HEV) will only be subject to 70% of the tax rate of gasoline vehicles of the same type, instead of 100% as at present. Meanwhile, hybrid electric vehicles that require external charging (PHEV) will only be subject to 50% of the tax rate of gasoline vehicles of the same type, instead of 70%.

If this policy is applied, the price of hybrid cars will decrease significantly, helping more consumers access fuel-efficient and environmentally friendly cars.

Adjusting the excise tax for electric hybrid vehicles is an important step in the strategy for sustainable automobile development in Vietnam. This policy not only helps reduce the price of hybrid vehicles, expanding access to consumers, but also brings great economic and environmental benefits. If implemented, this will be a strong driving force to help the domestic automobile industry develop in a greener and more sustainable direction.

Economic and environmental benefits

Not only does it help reduce costs for consumers, the preferential special consumption tax policy for hybrid vehicles also brings great benefits to the economy and the environment. Electric hybrid vehicles help save fuel significantly, with HEVs reducing consumption by about 30% and PHEVs reducing up to 50% compared to traditional gasoline vehicles. This not only helps users cut fuel costs but also reduces dependence on imported crude oil.

Regarding the environment, KPMG research shows that in the period 2026-2030, hybrid vehicles can help reduce more than 2.6 million tons of CO2, equivalent to a savings of VND333 billion from carbon credits. In addition, reducing fuel imports can help save up to VND28,000 billion in crude oil import costs, reducing pressure on the national trade balance.

In addition, this policy also motivates the domestic automobile industry to invest in green technology, expand production lines and create more jobs. A sustainable automobile industry not only brings economic benefits but also helps Vietnam gradually approach the trend of green transportation development in the world.

The preferential excise tax for hybrid vehicles not only ensures the interests of consumers but also helps strengthen investors' confidence in the stability of the policy. A favorable investment environment, without major fluctuations in tax rates, will help businesses be more confident in expanding production, improving technology and increasing the localization rate. This is an important factor for Vietnam to gradually build a strong automobile industry, capable of competing in the region and the world.

Applying tax incentives for hybrid vehicles helps reduce fuel consumption by 30-50%, while reducing more than 2.6 million tons of CO2 in the period 2026-2030. This not only saves VND28,000 billion in crude oil import costs but also promotes green car production, creating more new jobs for the domestic automobile industry.

Linh Dan