Fuel environmental tax cut extended through 2026

Fuel environmental tax cut extended through 2026

The Standing Committee of the National Assembly has agreed to maintain a 50 per cent cut to the environmental protection tax on petrol and oil through 2026, aiming to stabilise prices and curb inflation.

Members of the Standing Committee of the National Assembly voted to adopt the resolution. Photo: National Assembly

On October 17, the Standing Committee voted unanimously to keep tax levels unchanged from 2025, except for jet fuel. The environmental protection tax will stand at VND2,000 ($0.079) per litre for petrol (excluding ethanol), VND1,000 ($0.039) per litre for diesel, fuel oil, and lubricants, VND1,000 ($0.039) per kilogram for grease, VND600 ($0.024) per litre for kerosene, and VND1,500 per litre for jet fuel. From 2027, the tax rates will return to those stipulated in Resolution No.579/2018/UBTVQH14. (see chart)

Environmental protection tax on petrol, oil, and lubricants from 1 January 2026 to 31 December 2026. Chart: Nguyen Thu

Deputy Minister of Finance Nguyen Duc Chi explained that the environmental protection tax is an indirect levy added to the price of goods, ultimately borne by consumers. Reducing the tax, therefore, lowers domestic retail fuel prices, easing the direct costs for households and individuals while also reducing indirect costs across various goods and services. For businesses, it means lower production expenses, enhanced competitiveness, and greater capacity for recovery and expansion.

He noted that fuel taxes are a key component of the domestic base price for petrol and oil, directly involving the consumer price index. A continued 50 per cent cut in 2026, he stressed, is an important tool for inflation control and macroeconomic stability.

While the reduction is projected to cut the state budget by more than VND44 trillion ($1.73 billion), given estimated fuel equivalent consumption to 2025, the Ministry of Finance considers this a necessary cost to maintain growth momentum. “This policy will help build a solid foundation for double-digit growth from 2026 onwards, while mitigating risks from global volatility and enhancing the resilience of the economy,” Deputy Minister Chi said.

VIR