Green Incentives and Preferable Policies in Vietnam: An Overview for Investors

Vietnam has made a firm commitment to achieving net-zero emissions by 2050, aligning its long-term development strategy with global climate goals. To meet this target, the government is rapidly expanding a suite of green incentives and preferential policies aimed at accelerating the transition toward a low-carbon economy.

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Over the past several years, Vietnam has introduced a wide-ranging package of measures, from tax incentives for environmental projects and fee exemptions for renewable energy developers, to preferential tariffs for solar power and reduced special consumption tax for electric vehicles (EVs).

Most recently, the government has also drafted new rules to provide interest rate support for green and circular projects, further broadening the financial toolkit available to enterprises pursuing sustainable growth.

Green incentives under the 2020 Law on Environmental Protection

In January 2022, the government released Decree No. 08/2022/ND-CP (“Decree 8”), which details the preferential policies outlined in the 2020 Law on Environmental Protection to green sectors. This decree was further amended by Decree No. 05/2025/ND-CP (“Decree 5”) in January 2025.

The measures range from land allocation and financing support to tax exemptions and service subsidies, reinforcing Vietnam’s push toward a circular and low-emission economy.

Land incentives

Under Article 132 of Decree 8, investors implementing eligible projects listed in Appendix XXX are entitled to several land-related benefits:

• Priority land allocation: The State may allocate land linked to existing technical infrastructure (transport, electricity, drainage, telecommunications, and energy) without requiring land-use right auctions.
• Infrastructure investment support: If suitable land is unavailable, investors may receive support equivalent to investment incentives under the Law on Investment.
• Land-use fee exemptions or reductions:
  • Projects under Clause 3(b) of Appendix XXX qualify for special investment incentive treatment.
  • Projects under Clauses 2(c, d, đ) and 3(d) of Appendix XXX qualify for encouraged investment treatment.
• Reimbursement for compensation and site clearance: If investors advance such costs under an approved plan, these amounts may be deducted from payable land-use fees in accordance with land regulations.
• Resettlement and compensation: Projects requiring relocation due to State land recovery follow land law procedures for compensation and resettlement.

See also: Vietnam’s 2024 Land Law: Significant Amendments and Key Changes

Investment capital incentives

Article 133 of Decree 8 provides a range of investment capital supports to accelerate environmental project implementation:

• Vietnam Environment Protection Fund and provincial environmental funds:
  • Projects applying advanced waste treatment technology that limits landfill disposal to below 30 percent of total waste collected are eligible for preferential loans at rates not exceeding 50 percent of the State investment credit rate and for amounts up to 80 percent of total project cost;
  • Other eligible projects may borrow up to 70 percent of total investment at the same preferential rate; and
  • Both categories may receive post-investment interest support financed from fund surpluses.

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• Vietnam Development Bank (VDB): Investment credit is provided under the Government’s State investment credit policies.
• Direct State support: The budget may subsidise interest after repayment of medium- or long-term green credit loans for projects eligible under Appendix XXX.
• Credit guarantees: Available for small and medium-sized enterprises (SMEs) under the Law on Credit Guarantees.

Corporate income tax (CIT) incentives

Decree 5 stipulates that income from approved projects is eligible for preferential rates and tax holidays under Vietnam’s CIT laws.

According to the 2025 CIT Law, companies that invest in environmental protection projects can enjoy a reduced 10 percent corporate income tax (CIT) rate on eligible income derived from the project for a period of 15 years. Vietnam’s standard CIT rate is 20 percent.

To qualify for the reduced CIT rate, the investment must fall under one of the incentivized sectors outlined in Article 12 of the 2025 CIT Law, and the fields listed in Appendix XXX issued along with Decree 8.

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The incentivized green industries in the Law of CIT include the production of renewable energy, clean energy, and energy from waste disposal, as well as environmental protection. Meanwhile, Appendix XXX covers a wide range of sectors, including production of clean and renewable energy, and environmental monitoring equipment, the production and supply of wastewater treatment services, and the production of clean energy vehicles and public transport services.

New investment projects that have invested at least VND 6 trillion (US$228 million) and “have a large socio-economic impact” may also be granted a 15-year extension of the preferential policy.

Additionally, investment projects in the manufacturing industry related to new energy, clean energy, and the energy conservation sector that meet the following criteria can also be granted a 15-year extension:

• Have a minimum investment capital of VND 12 trillion (US$455 million) and disburse the total registered investment capital within five years of the investment permission being granted; and
• Use certain eligible technology as prescribed by the Minister of Science and Technology.

In addition to the reduced 10 percent CIT rate, income derived from the investment project can also enjoy a four-year tax holiday and a 50 percent reduction in the tax payable for the following nine years. The period of tax exemption and reduction is calculated from the first year in which the investment project generates taxable income. In cases where there is no taxable income within the first three years from the first year the project has revenue, the period of tax exemption and reduction shall be counted from the fourth year.

Export tax exemptions

As per Decree 5, products that are manufactured from certain eligible waste recycling and treatment activities are exempt from paying export tax.

The eligible activities are:

• Manufacturing and supply of on-site domestic wastewater treatment equipment for household-scale production and business establishments; and
• Environmentally friendly products and services certified with the Vietnam Ecolabel by the Ministry of Natural Resources and Environment.

The products must also meet the following criteria:

• Are produced from licensed recycling and waste treatment activities of the project itself;
• Use waste as the raw materials for production, but do not use imported scrap or waste materials from third parties;
• Meet quality standards for export under Vietnamese law; and
• Production matches the business lines and objectives stated in the investment license.

The exemption applies only to the volume proven to originate from recycling ot treatment activities.

Import tax exemptions

Companies investing in environmental protection projects can also benefit from import tax exemptions on specialized machinery, equipment, vehicles, tools, and materials that are directly used in green projects.

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Eligible imports include items required for waste treatment, environmental monitoring, and renewable or clean energy production. To qualify, the equipment and materials must be listed in the project’s feasibility study report or equivalent documents, and the project must have obtained an approved environmental license or environmental impact assessment.

Import exemptions are not available if the machinery or equipment can be produced domestically, as defined by the Ministry of Planning and Investment’s official list. Companies are responsible for declaring the accuracy of their imports and ensuring the items are used exclusively for the approved environmental protection project.

Price subsidies for environmental services

Article 135 of Decree 8 provides for price subsidies for selected environmental public services through State procurement, ordering, or bidding mechanisms, including:

• Urban and residential wastewater collection and treatment;
• Household solid waste collection and transportation; and
• Public transport services using non-fossil-fuel vehicles.

Preferential policies for renewable energy

Fee exemptions and financial incentives for new energy projects

Companies investing in new energy power projects in Vietnam may be eligible for a variety of fee exemptions and reductions, as well as long-term electricity output guarantees. These incentives are provided under Article 23.2 of the Electricity Law and further detailed in Decree 58/2025/ND-CP (“Decree 58”), released in March 2025.

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Eligible projects include new energy power projects that:

• Use 100 percent green hydrogen, 100 percent green ammonia, or a mixture of both as the energy source;
• Supply electricity to the national power system; and
• Represent the first project of each type of new energy electricity.

Eligible projects can enjoy the following preferential policies:

• Exemption from sea area fees during the basic construction period, not exceeding three years from the start of construction. A 50 percent reduction in sea area fees applies for the following nine years.
• Exemption from land use fees and land rent during the basic construction period, not exceeding three years.
• A guaranteed minimum long-term contracted electricity output at 70 percent of the loan principal repayment period, up to 12 years, unless otherwise agreed by the investor and electricity buyer.

In addition, ministries and provincial authorities encourage the establishment of innovation centers and research programs in the electricity sector, focusing on renewable energy, new energy, energy efficiency, and smart energy solutions.

See also: Vietnam Renewable Energy Reform 2025: Key Changes on DPPAs

Incentive policies for residential rooftop solar power

Decree 58 allows organizations and households that generate self-produced electricity for personal consumption to sell excess electricity to the national power system. Non-rooftop sources are limited to selling no more than 10 percent of total output. While Decree 58 does not impose limits on the sale of excess rooftop solar electricity, Decree No. 57/2025/ND-CP (“Decree 57”), also released in March 2025, stipulates that rooftop solar systems may sell up to 20 percent of their generation to Vietnam’s state utility, Vietnam Electricity (EVN).

Eligible participants include:

• Rooftop solar systems connected to the national power system and within the provincial power development plan and grid development plan.
• Individual households with rooftop solar installations under 100 kW connected to the grid of the Buyer of surplus electricity.
• Rooftop solar systems installed in mountainous, border, or island areas, even if not yet linked to the national grid.

Developers must comply with legal, technical, and operational requirements, including laws on investment, construction, land use, environmental protection, safety, and fire prevention. Additionally they must abide by the following rules:

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• For power sources not connected to the grid, developers must notify the Department of Industry and Trade and provincial electricity units, providing project details such as type, capacity, purpose, location, and timeline.
• For grid-connected sources, capacity must align with provincial and national power development plans. Developers must agree with power units on connection points and boundaries, and meet technical, control, and supervision requirements.
• For sources selling surplus electricity, a metering agreement with the Buyer is required, and an electricity operation license must be obtained unless exempt.

Households installing rooftop solar systems under 100 kW are exempt from registering or adjusting their Business Registration Certificate when selling surplus electricity.

Incentive policies for offshore wind power development

Under Decree No. 58/2025, offshore wind power projects are entitled to preferential fee exemptions, land rent reductions, and long-term electricity contracts.

Eligible projects must:

• Be approved or decided in principle by a competent authority before January 1, 2031;
• Supply electricity to the national power system; and
• Have a minimum capacity of 6 GW, as approved in the national power development plan.

Preferential mechanisms include:

• Exemption from sea area fees during the basic construction period, not exceeding three years, followed by a 50 percent reduction for 12 years;
• Exemption from land use fees and land rent during the basic construction period, not exceeding three years; and
• Minimum long-term contracted electricity output of 80 percent of the loan principal repayment period, up to 15 years, unless otherwise agreed by the investor and power buyer.

Projects approved after December 31, 2030, will enjoy preferential mechanisms in accordance with the law in effect at the time of approval.

Solar feed-in tariffs

Vietnam currently implements a solar feed-in tariff (FiT) program to allow solar power developers to receive a fixed price for the electricity they generate and feed into the national grid. FiTs provide predictable, long-term returns, helping to mitigate market risks and incentivize private investment in solar energy.

The program covers ground-mounted and floating solar projects, with separate rates for systems that include battery energy storage (BESS). Legacy projects that began operations before January 1, 2021, are exempt from the new pricing framework, ensuring continuity for early investors.

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All developers of new solar projects connected to the national power system may qualify, including:

• Ground-mounted solar plants, with or without BESS.
• Floating solar projects, with or without BESS.
• Projects that meet the technical and grid connection requirements established by EVN and the Electricity Regulatory Authority of Vietnam (ERAV).

To access the BESS-specific tariffs, storage systems must meet minimum criteria, including a capacity of at least 10 percent of the plant’s capacity, a storage/discharge time of two hours, and a charging power output ratio of 5 percent of the plant’s output.

The FiT rates are determined annually by EVN in coordination with ERAV, taking into account regional solar radiation, technical data, economic feasibility, and participation from developers. Developers must ensure that their project complies with relevant investment, construction, environmental protection, safety, and grid connection regulations.

For projects integrating energy storage systems, the investment cost of the storage system is included in the electricity generation price calculation, provided that the storage charges exclusively from the plant’s own electricity output.

Preferential policies for electric vehicles

EV fee exemption

Vietnam has extended its 100 percent registration fee exemption for battery-powered electric vehicles (EVs) to 2027, building on the initial incentive introduced in 2022. Originally, EV buyers benefited from a full exemption for three years, followed by a 50 percent reduction for the next two years. Without extension, this policy would have expired on February 28, 2025, requiring buyers to pay half of the standard registration fee.

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This measure significantly reduces the upfront cost of EVs, encouraging adoption among households and businesses and helping accelerate Vietnam’s transition to a low-carbon transport system.

Car registration fees in Vietnam are calculated based on vehicle type, location, and government incentives. For electric cars, the updated rates under Decree 51 are as follows: a full exemption for the first three years, and a 50 percent reduction for the next two years relative to fees applied for gasoline or diesel cars. These exemptions make EVs financially more attractive compared with internal combustion engine (ICE) vehicles and support broader market growth.

Lower special consumption tax for EVs

Vietnam’s 2025 Special Consumption Tax Law, which takes effect on January 1, 2026, introduces differentiated SCT rates for electric, hybrid, and renewable-fuel vehicles compared with conventional ICE vehicles. The law is designed both to protect public health and to encourage environmentally friendly transport.

Under the new SCT framework:

• Battery-powered electric vehicles will face low SCT rates of 1 to 3 percent in 2026, increasing to 4 to 11 percent in 2027.
• Hybrid vehicles (gasoline + electric or biofuel, with gasoline ≤70 percent of total energy) and vehicles running on natural gas will be taxed at 70 percent of the applicable SCT rate for comparable ICE vehicles.
• Vehicles running entirely on biofuels will be subject to 50 percent of the applicable SCT rate for equivalent ICE vehicles.

In comparison, conventional passenger cars and four-wheeled vehicles with engines seating up to nine passengers are subject to SCT rates of 35 to 150 percent, while double-cabin pick-up trucks and certain vans face 15 to 25 percent in 2026, rising to 24 to 34 percent by 2029.

Draft proposal for interest rate support for green and circular projects

On September 29, 2025, Vietnam’s Ministry of Finance issued a draft decree to provide interest rate support for private enterprises, household businesses, and individual entrepreneurs undertaking green and circular projects.

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Under this policy, borrowers accessing funds through state-owned financial funds outside the budget can benefit from a 2 percent annual interest subsidy on eligible loans. The support is contingent on applying environmental, social, and governance (ESG) standards as defined by the Prime Minister and published in the official list of green and circular projects.

Eligible borrowers include private enterprises, household businesses, and individual entrepreneurs that meet the following conditions:

• Borrow funds through one of the recognized state-owned financial funds outside the budget, including the Small and Medium Enterprise Development Fund, the Vietnam Environmental Protection Fund, local environmental protection funds, cooperative development funds, and local development investment funds. Other similar funds may also qualify if established by competent authorities.
• The loan must finance a project certified as green or circular and compliant with ESG standards, as listed on the Ministry of Agriculture and Environment’s online portal.
• The loan must not already benefit from interest subsidies under other government policies.
• The loan must have a minimum interest rate of 2 percent per year and must be disbursed and outstanding after the decree comes into effect.
• Borrowers must use the funds strictly for the intended green or circular project.

Loans will no longer receive support if the principal becomes overdue or extended, or if the project ceases to meet the official ESG-listed criteria.

Opening up opportunities for investment

Vietnam’s expanding set of green incentives demonstrates a clear commitment to aligning economic growth with its 2050 net-zero target. By combining tax breaks, fee exemptions, preferential tariffs, and new financial support schemes, the government is creating a more favorable environment for investment in renewable energy, clean mobility, and sustainable business practices. For businesses, these measures can help to direct investment into priority sectors and open up new opportunities in the country’s rapidly growing green sectors.

(US$1 = VND 26,344.98)

With inputs from Vu Nguyen Hanh.

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