Spurred by a major energy crisis resulting from the war in Iran, the Vietnamese government is pushing to extend its highly preferential tax rates for electric vehicles through the end of 2030.
Latest Developments: On the afternoon of April 21, Finance Minister Ngô Văn Tuấn presented a comprehensive Draft Law to the National Assembly, proposing amendments to the laws governing Personal Income Tax, Value-Added Tax, Corporate Income Tax, and the Special Consumption Tax.
The standout provision of this package is the proposed extension of current tax breaks for electric cars with fewer than 24 seats, maintaining the incentives until the end of the decade.
The Backstory: During the first quarter of 2026, nearly 54,000 EVs were sold out of 162,041 total new cars. The domestic manufacturer VinFast utterly dominated this segment, selling 53,684 units and claiming nearly 100% of the domestic EV market.
Pushback: While the primary goals are environmental protection and reducing reliance on fossil fuels, Phan Chí Hiếu, Chairman of the Law and Justice Committee, warned that lawmakers must “carefully assess the impact from a market competition perspective, especially the risk of low-cost electric vehicles from abroad entering Việt Nam in large numbers if tax incentives continue.”
Why It Matters: Since March 2022, the special consumption tax on electric vehicles has been slashed to a mere 1%–3%, down from 4%–11%. Conversely, standard fossil fuel vehicles face an enormous tax burden; depending on engine displacement, the special consumption tax alone can reach 35% to 150% of a vehicle’s pre-tax value, not to mention standard import taxes and registration fees.
The Timeline: Under the Government’s Directive 20, Hà Nội is preparing to eradicate traditional combustion engines systematically from its urban core.
Starting July 1, 2026, fossil fuel-powered motorcycles will be banned from operating within Ring Road 1.
By Jan. 1, 2028, these restrictions will expand to ban private fossil fuel-powered cars within Ring Roads 1 and 2.
By 2030, the ban will apply to all gasoline and diesel personal vehicles operating within Ring Road 3.
Thạch Hãn wrote this article in Vietnamese and published it in Luật Khoa Magazine on April 22, 2026. The Vietnamese Magazine has the copyrights of the English translation.
