Financial policy promotes green economic development

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Apply preferential taxes for project-investing businesses in the field of environmental protection. Illustration photo: TTXVN

Tax policy encourages environmental protection

In recent times, many tax, fee and charge policies aimed at developing the green economy have been developed and continuously improved. The tax, fee and charge policy system towards sustainable development and green economic development is expressed through 2 groups: group 1 is the policy to limit acts that cause environmental pollution and group 2 is the policy policies to support and encourage environmental protection activities to create motivation to promote green production and green consumption.

For the group of tax, fee and charge policies to limit acts that cause environmental pollution, the Ministry of Finance has developed an environmental protection tax policy for goods and products that when used cause negative impacts on the environment such as: Gasoline, oil, grease, coal, plastic bags, herbicides are restricted from use; Apply special consumption tax on goods that cause environmental pollution when used, such as cigarettes, gasoline, and cars with less than 24 seats. At the same time, high import taxes are applied to items that directly emit gases that cause greenhouse effects and environmental pollution when used, and items that pollute the environment during the exploitation process. Import tax rates gradually decrease from finished products to raw materials, export tax rates gradually increase from finished products to raw materials. Along with that, applying environmental protection fees to emissions, wastewater, and mineral exploitation not only contributes to generating revenue for the budget, but also limits waste that causes environmental pollution, etc.

In addition to tax policies to limit acts that cause environmental pollution, the Ministry of Finance also develops many preferential tax policies in environmental protection, specifically: tax exemption for income from contract performance of scientific research and technology development, products in the trial production period, products made from new technology applied for the first time in Vietnam; Income from the transfer of emission reduction certificates for the first time of enterprises that are granted emission reduction certificates; The undivided income of an establishment implementing socialization in the environmental field is left to invest in the development of that establishment. In addition, the Ministry of Finance also applies a tax rate of 10% for 15 years, tax exemption for a maximum of no more than 4 years and a 50% reduction in corporate income tax payable for a maximum of no more than the next 9 years for income of enterprises from new investment projects in the field of environmental protection; preferential tax rates for environmentally friendly products such as biofuel, environmentally friendly cars, etc.

Along with promulgating tax and fee policies aimed at developing a green economy, the Ministry of Finance has advised the Government and issued many policies to prioritize state budget spending for green growth. Regarding public investment, the budget for green growth has been integrated into investment priorities for sectors, fields, localities and target programs, detailed regulations in Resolution No. 973/2020/UBTVQH dated 14 July 8, 2020 regulates the principles, criteria and norms for allocating public investment capital from the state budget for the period 2021-2025.

​Develop financial policies for carbon markets to operate effectively

In the process of ensuring the implementation of Vietnam's obligation to reduce greenhouse gas emissions, developing the domestic carbon market is considered a key priority task. Currently, the Ministry of Finance is assigned to preside over and coordinate with the Ministry of Natural Resources and Environment and relevant ministries and branches to carry out the tasks of establishing a domestic carbon market; promulgate a financial management mechanism for market operations and submit to the Prime Minister for approval the Carbon Market Development Project in Vietnam.

According to the Draft Project to develop the carbon market in Vietnam, drafted by the Ministry of Finance and submitted to the Prime Minister for approval, one of the tasks and solutions to implement the Project proposed by the Ministry of Finance is to build and improve the legal framework, including the development of financial regulations for the operation of the carbon market. After the Carbon Market Development Project is approved by the Prime Minister and based on the provisions of law, the Ministry of Finance will continue to research to submit to competent authorities for promulgation of regulations and financial policies for the operation of the carbon market so that the market can operate effectively.

Notably, regarding the development of the stock and green bond market, in 2017, the Ho Chi Minh City Stock Exchange built and announced the Sustainable Development Index (VNSI), aiming at the goals of determining sustainable development standards for listed companies; support institutional and individual investors in identifying businesses with "green" characteristics to invest in; strengthen the sustainable development trend of the entire economy; identify environmental, social and governance best practice criteria. The Ministry of Finance also issued Circular No. 96/2020/TT-BTC guiding the disclosure of information on the stock market with new requirements on Environmental and Social Impact Reporting of companies.

Currently, developing the green bond market is one of the tasks set out in the Bond Market Development Roadmap for the period 2017-2020, vision to 2030 and the Financial Strategy to 2030. To develop To develop the green bond market, the Ministry of Finance has coordinated with the Ministry of Natural Resources and Environment, the Ministry of Planning and Investment, and relevant ministries and branches to develop provisions on green bonds in 2020 Law on Environmental Protection and the instruction decree. When issuing green bonds, businesses receive preferential service prices on the stock market. Public investment projects using capital from the issuance of green bonds issued by the Government and local authorities are also given priority to allocate enough capital according to project implementation progress in the medium-term and annual public investment plan.