In brief
Vietnam’s recent government resolution eliminates the special consumption tax on regular gasoline and biofuels for an extended period of more than two years. The tax, which had been reduced to zero briefly earlier this year, will remain at zero until the end of March 2027 while the environmental protection tax stays at zero and value‑added tax exemptions extend through 2026. The decision raises questions about its economic rationale and fiscal impact.
Vietnam has reduced the special consumption tax on all types of gasoline to zero percent until March 31 2027, a move announced by a government resolution and reported by the state news agency Xinhua.
The new rule comes in the wake of a special consumption tax law that came into force on July 1 this year, which set rates at 10 percent for regular gasoline, 8 percent for E5 biofuel and 7 percent for E10 biofuel, Xinhua said.
Earlier in the year, the Vietnamese government had temporarily lowered the special consumption tax to zero from late March through June 2026 as a market‑stabilisation measure, according to Xinhua.
Under the current resolution, the tax on all gasoline types—including the newly normalised regular gasoline and the lower‑priced E5 and E10 biofuels—will remain at zero until the end of March 2027.
Xinhua noted that while the special consumption tax is suspended, the environmental protection tax on gasoline and oil products stays at zero Vietnamese dong per liter.
Products subject to the zero environmental protection tax are also exempt from value‑added tax declaration and payment; this exemption has been extended through the end of 2026, the Vietnamese outlet reported.
The decision eliminates a 10‑percent levy that had been a significant component of the gasoline price structure, but it does not affect consumption taxes on other fuels or on non‑fuel commodities, Xinhua explained.
Government officials have not yet clarified how the loss of special consumption tax revenue will be compensated or how the measure will influence domestic fuel demand, leaving analysts and business observers to question the economic and fiscal implications of the policy.
