In brief
Vietnam has canceled its special consumption tax on gasoline, a move that could dampen fuel prices for the next 16 months. The decision, enacted by a new government resolution, suspends the previously scheduled 10%, 8%, and 7% rates for regular, E5, and E10 fuels respectively. Authority under Deputy Prime Minister Nguyen Van Thang supports the measure, which builds on earlier temporary reductions that aimed to stabilize the domestic market.
Vietnam has cancelled its special consumption tax on all gasoline types, setting the rate to zero until March 31, 2027 under a newly issued resolution.
The change eliminates the 10 % levy that applied to regular gasoline, the 8 % tax applicable to E5 biofuel and the 7 % rate for E10 blends, which had been in place since the special consumption tax law commenced on July 1 of the same year. Prior to the current decree, the tax had already been temporarily lowered to zero from late March to June 2026 to soothe a softening domestic demand for fuels.
Under the broader tax policy, Vietnam retains the environmental protection tax on gasoline and oil products at zero Vietnamese dong per litre, and continues to exempt these products from value‑added tax filing and payment. The exemption is set to run until the end of 2026. This layered tax structure allows the government to influence fuel pricing through multiple levers while keeping environmental charges low for consumers.
Deputy Prime Minister Nguyen Van Thang announced the move in a recent statement, noting that the special consumption tax on gasoline would be reduced from 7 % to 0 % for the period ending March 31, 2027.
“We will reduce the special consumption tax on gasoline from 7 % to 0 % from now until March 31, 2027,” Nguyen Van Thang said.
While the decree does not affect the initial tax rates for E5 and E10 fuels, steps to remove the special consumption tax across all gasoline categories may lower the average retail cost of petrol and the biofuel blends. Analysts suggest that the removal of taxes—particularly on E10, which holds a globally growing share of motor fuel—could temporarily increase demand, potentially stabilising supply chain pressures that had begun to surface due to seasonal demand peaks and limited refinery capacity.
The policy ties into Vietnam’s broader energy strategy, which seeks to diversify fuel sources and mitigate reliance on a single commodity. By easing the fiscal burden on gasoline consumption, the government aims to support domestic motor transport and industrial activity while the country continues to invest in alternative fuels and energy efficiency measures. The temporary nature of the tax relief, ending in early 2027, also signals an anticipated shift back to regular rates as market conditions normalize and fiscal consolidation plans move forward.
Observers note that although the short‑term tax reduction may spur consumption and lower oil‑product prices, it also removes a revenue stream that could otherwise fund renewable energy projects or subsidies for electric vehicle adoption. Balancing fiscal sustainability with market stability remains a key challenge for Vietnam’s energy policymakers as they navigate a rapidly evolving global fuel landscape.