Vietnam to introduce new environmental fee for emissions

In a significant move towards curbing environmental degradation, Vietnam's Ministry of Finance (MoF) has opened the floor for feedback on a draft decree detailing new environmental protection fees for emissions.

Initially, the fee will be applied to entities discharging pollutants, notably businesses involved in steel production, metallurgy, inorganic chemical manufacturing, inorganic fertiliser production, chemical-based plant protection products, oil refining, waste recycling, hazardous waste treatment, thermal power, and cement production.

Facilities emitting pollutants will be mandated to pay a fixed fee of VND3 million ($126.58) annually. Additionally, a variable rate ranging from VND500 (2 US cents) to VND800 (3 US cents) per tonne will be applied to four major pollutants – total dust, nitrogen oxides, sulphur oxides, and carbon monoxide.

Sites that face continuous automatic emissions monitoring are required to submit quarterly environmental fee declarations by the 10^th day of the first month of the subsequent quarter. Any delay in fee submission will result in the levy of a late fee, as stipulated in the tax administration law. Payments can be made via bank transfers to dedicated fee-collection accounts, or directly in cash.

Incentivising cleaner technologies

By implementing these fees, the MoF hopes to encourage entities to invest in technologies that reduce emissions and minimise environmental damage. This initiative aligns with the Party and the government's agenda of prioritising air quality protection.

The proposal mirrors the environmental protection fee framework for industrial wastewater that is set out in Decree No.53/2020/ND-CP. This cohesion aims to enhance the efficiency of public service execution, economise human resources, and simplify the fee submission process for stakeholders.

Emission quantities will be ascertained based on monitoring data, ensuring fairness among businesses. Such measures will amplify the role of the public in overseeing the fee submission process of polluters, enabling timely reporting of violations to competent state agencies.

Background and context

The draft decree's explanatory note emphasises that, as Vietnam progresses economically and socially, the air quality in major cities and several industrial zones (IZs) is deteriorating. Such degradation poses severe threats to public health, the economy, and the environment.

Air pollution, particularly in large urban areas, has reached alarming levels at times. With approximately 5.1 million cars and a plethora of motorcycles in circulation, coupled with significant IZs emitting vast quantities of pollutants daily, the situation is dire.

Vietnam currently hosts nearly 120,000 industrial manufacturing units. Of these, 138 are categorised as causing severe environmental pollution, according to Decision No.1788/QD-TTg. Moreover, around 110,000 construction businesses contribute heavily to emissions, adversely impacting the environment.

So far, efforts to comprehensively address these pollution sources remain incomplete. Regrettably, most firms discharging pollutants lack full awareness of their responsibilities in protecting air quality.

Therefore, the MoF believes that the introduction of this environmental protection fee for emissions is essential. It aims to institutionalise the Party and government's objectives, enhance the legal fee system, address current demands, and gradually heighten environmental protection awareness among emitting entities.

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