The Ministry of Finance has proposed amendments to Vietnam's Law on Corporate Income Tax, aiming to exempt corporate taxes on income from green bond interest and carbon credits.
Two elephants roaming in Yok Don National Park, the largest national park in Vietnam. AI-generated picture.
These proposed changes align with global trends of using tax incentives to support environmentally forward practices and sustainable development. The initiative seeks to protect the environment by encouraging investment in green bonds and the trading of carbon credits.
Carbon credits are a market-based approach that provides economic incentives for reducing greenhouse gas emissions. By allowing the trading of emission permits, this system promotes cost-effective emission reductions and fosters sustainable practices.
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Vietnam's 2020 Law on Environmental Protection, which took effect on 1 January 2022, includes provisions for carbon credits and mechanisms for their exchange and transfer. This legal framework supports the management and implementation of carbon credit activities, aiming to develop a robust carbon market and enhance environmental protection efforts.
Additionally, the Law on Environmental Protection addresses green bonds, which are financial instruments designed to fund projects that have positive environmental benefits.
The Ministry of Finance has evaluated the potential impact of the proposed tax exemptions on green bonds. If green bonds are issued successfully, capturing 0.17%–0.5% of the bond market, the corporate income tax exemption could range from $4 million to $12 million (VND 100 billion to VND 300 billion).
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These amendments are part of Vietnam's broader strategy to promote environmental sustainability and attract investments in green projects.
At DGB Group, we leverage our commitment and expertise to implement effective, verified nature-based solutions that enhance biodiversity and community wellbeing. We offer green bonds and verified carbon units that provide you with a tangible and transparent way to access and benefit from the carbon market.
Download DGB's carbon unit brochure
