Environmental protection tax incentives in Vietnam

by NguyenThiThuTrang

Tax policy to protect the environment is an effective method to prevent environmental pollutants, harmonize the beneficial relations between society and businesses, strengthen social relations, encourage awareness of people in saving, reducing waste in the process of exploiting as well as using natural resources and strengthening measures to protect the environment. Tax incentives for environmental protection have seen many positive changes in recent years. To learn more about “Environmental protection tax incentives in Vietnam” and related issues, please refer to our article below:

Legal grounds

Law on Environmental Protection 2020
Decree 08/2022/ND-CP of the Government

Preferential policies, support for environmental protection

The Law on Environmental Protection 2020 has many new points in terms of preferential policies, supporting environmental protection. Article 141 provides for incentives and support for environmental protection as follows:

  1. Preferential policies and support for environmental protection are prescribed as follows:

a) The State shall provide incentives and support in terms of land and capital; exemption and reduction of taxes and fees for environmental protection activities; price subsidies and freight subsidies for environmentally friendly products and other incentives and supports for environmental protection activities in accordance with law;

b) Organizations and individuals that carry out many environmental protection activities and receive incentives and support shall be entitled to corresponding incentives and supports for those activities;

c) In case environmental protection activities are entitled to the same incentives and supports as prescribed in this Law and other relevant laws, such incentives and supports shall be entitled to incentives and support according to a document specifying the level of incentives. , higher support;

d) The level and scope of incentives and support for environmental protection activities shall be adjusted to ensure compliance with the environmental protection policy from time to time.

  1. Investment and business activities in environmental protection eligible for incentives and support include:

a) Investment projects in the industry or profession of waste collection, treatment, recycling or reuse;

b) Enterprises producing and providing technology, equipment, products and services to meet environmental protection requirements, including waste treatment technology combined with energy recovery; energy-saving technology; centralized domestic wastewater treatment services; environmental monitoring services; public transport services using electric energy and renewable fuels; clean energy production, renewable energy; manufacturing and supplying environmental monitoring equipment, on-site domestic wastewater treatment equipment, environment-friendly products and services certified with Vietnam Eco-label.

  1. Environmental protection activities that are not business investment activities entitled to incentives and supports include:

a) Activities of technological innovation, renovation and upgrading of waste treatment works according to the roadmap prescribed by the law on environmental protection;

b) The relocation of households out of concentrated production, business, service areas, industrial clusters or the relocation of operating establishments to meet a safe distance from the environment;

c) Investment in development of natural capital and protection of natural heritage.

  1. Activities of scientific research and technology development, technology transfer in environmental protection are entitled to incentives and support according to the provisions of law on science, technology and technology transfer.
  2. The Government shall detail this Article”.

Subjects entitled to environmental protection tax incentives

Decree 08/2022/ND-CP dated January 10, 2022 of the Government guiding the implementation of the Law on Environmental Protection has detailed the list of environmental protection activities eligible for incentives and support. Accordingly, there are 3 groups:

  • Investment project in the field of waste collection, treatment, recycling or reuse includes 4 areas:

Treatment and destruction of solid waste (waste);

Collecting solid waste (waste);

Collect and treat wastewater;

Recycle or reuse waste.

  • Enterprises that manufacture and supply technology, equipment, products and services to meet the requirements of environmental protection, including:

Provide waste treatment technology combined with energy recovery, energy-saving technology to be evaluated or appraised or have opinions according to the provisions of law on technology transfer;

Provide domestic wastewater treatment services, daily-life solid waste co-treatment, and environmental monitoring services;

Production of clean energy, renewable energy, environmental monitoring equipment.

In addition, enterprises manufacturing and providing on-site wastewater treatment equipment for household-scale production and business establishments, environmentally friendly products and services are certified by the Ministry of Natural Resources and Environment. Male; Products manufactured from recycling and waste treatment activities meet the provisions of the law on product quality; enterprises producing public transport vehicles (except for public transport using oil), manufacturing means of transport using electricity, renewable energy, low fuel consumption, low emissions or no emissions , public transport services using electric energy, clean fuels, and renewable fuels are also supported.

Environmental protection activities are not business investment activities, enterprises are supported when:

To renew technology, renovate and upgrade waste treatment works to implement the roadmap promulgated by competent state agencies in accordance with the law on environmental protection;

Apply the best available technology earlier than the roadmap for cases where it must be applied or voluntarily applied;

Completing the installation of automatic and continuous industrial wastewater, dust and gas monitoring systems earlier than scheduled.

  • Other environmental protection activities that are not business investment activities are also supported, including:

Relocating households out of production, business, service, industrial clusters;

Relocating operating facilities to meet the environmental safety distance or implementing the roadmap promulgated by competent state agencies in accordance with regulations on environmental protection;

Investing in the development of renewable natural capital, providing natural ecosystem services, and protecting natural heritage;

To treat and improve the environment of daily-life solid waste burial sites.

Level of capital support, land, tax and fee incentives

Enterprises operating in the above list are entitled to incentives and support for investment capital from the Vietnam Environmental Protection Fund, the Environmental Protection Fund of the provinces, the Vietnam Development Bank; preferential tax, fees and charges, land support.

– For enterprises dealing in solid waste treatment and destruction, if applying waste treatment technology, the proportion of waste that must be buried after treatment is less than 30% of the total amount of collected solid waste. Environmental Protection Fund with the maximum preferential interest rate not exceeding 50% of the state investment credit interest rate announced by the competent authority at the time of lending, the total loan amount not exceeding 80% of the total loan amount. construction investment; are prioritized for post-investment support from the annual revenue and expenditure difference.

– 3 groups of services: collection and treatment of domestic wastewater in urban areas and concentrated residential areas; Services of collecting and transporting daily-life solid waste from households and individuals; Public transport services, except services using public transport using oil, are subsidized for products and services.

According to the provisions of Article 134 of Decree No. 08/2022/ND-CP, the implementation of investment projects on the list of environmental protection activities will receive incentives and support in terms of corporate income tax, specifically:

  1. Incentives on corporate income tax: incomes of enterprises from the implementation of investment projects on the list of environmental protection activities eligible for incentives and support specified in Clauses 1 and 2 of Appendix XXX attached to this Circular. under this Decree are entitled to corporate income tax incentives in accordance with the law on corporate income tax.
  1. Incentives on other tax, charge and fee policies shall comply with the provisions of the law on taxes, fees and charges”.

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Frequently asked questions

Regulations on incentives Support to promote environmental protection activities?

Pursuant to Clause 1, Article 137 of Decree 08/2022/ND-CP, the State encourages organizations, individuals, enterprises and cooperatives to carry out the following activities:
a) Promote products from environmental protection activities, recall and treatment of discarded products;
b) Producing and disseminating various types of films and television programs on environmental protection in order to raise people’s awareness of environmental protection and use of environmentally friendly products;
c) Provide free tools for households and individuals to classify waste in daily-life solid waste. 2. Expenses for performing activities specified in Clause 1 of this Article shall be accounted into production expenses of organizations, individuals, enterprises and cooperatives in accordance with law.

How is the list of public products and services on environmental protection regulated?

Clause 1, Article 135 of Decree 08/2022/ND-CP provides for this list, including:
a) Collection and treatment of domestic wastewater in urban areas and concentrated residential areas;
b) Services of collecting and transporting daily-life solid waste from households and individuals;
c) Public transport services, except services using public transport using oil.

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