Under Decree No. 10/2022, electric cars are entitled to a five-year preferential policy on registration fees, including three years of full exemption followed by a 50% reduction for the next two years.

This means that from March 1, 2025, EV buyers would have to pay 50% of the standard registration fee unless an extension is approved.

To prevent a sudden policy shift, the Ministry of Finance has proposed extending the full exemption for an additional two years, until February 28, 2027.

VinFast had proposed a longer extension

Before this, VinFast, a leading Vietnamese electric vehicle manufacturer, had submitted a request to the Prime Minister, recommending that the 100% exemption be extended for three years, from March 1, 2025, to February 28, 2028, with an additional 50% reduction for three more years afterward.

However, the Ministry of Finance’s current proposal shortens the full exemption period by one year compared to VinFast’s request.

The registration fee is one of several costs vehicle owners must pay before their car can be officially used on the road. Waiving this fee for electric vehicles is a key strategy to promote green transportation and encourage consumers to switch to EVs.

According to the Ministry of Finance, continuing the registration fee exemption for battery-electric vehicles will help:

Support the development of the EV market and related industries

Create jobs and boost incomes for workers

Enhance social welfare and economic spillover effects

Furthermore, the Ministry emphasized that electric vehicles significantly reduce greenhouse gas emissions, with their environmental benefits expected to increase as the EV market grows by 25-30% annually.

Unlike internal combustion engine (ICE) vehicles, which generate substantial noise pollution, electric vehicles operate almost silently, improving the urban environment.

Impact on government revenue

Despite these advantages, extending the tax exemption for two more years is estimated to result in an annual revenue loss of approximately 4.8 trillion VND (about 195 million USD).

The government must now weigh the economic trade-offs of lost tax revenue against the long-term benefits of electric vehicle adoption and sustainable transportation policies.

Hanh Nguyen