The introduction of fuel efficiency benchmarks is affecting the tax treatment of hybrid vehicles, enabling self-charging hybrid models to be assessed for eligibility for special consumption tax incentives in Vietnam.

The determination of hybrid vehicle eligibility has a defined legal basis following the release by the Vietnam Register of average fuel consumption levels for each vehicle group, categorised by engine displacement.

This follows instructions issued by the Ministry of Construction in early January 2026 to finalise technical criteria for the application of tax policies related to environmentally friendly vehicles. The newly published data table functions as an additional reference point, alongside vehicle type comparison criteria, for assessing whether a hybrid model qualifies for incentives.

Previously, hybrid models were considered eligible for tax incentives if they shared the same vehicle type, engine displacement and seating capacity as their petrol or diesel counterparts, while achieving at least 30% fuel savings.

In practice, some models did not meet these comparison conditions, which meant that the applicable tax rate for certain hybrid vehicles could not be determined immediately.

Under the newly released benchmarks, self-charging hybrid vehicles may qualify for tax incentives through additional assessment methods.

Vehicles with an engine displacement of 1,500 cc or below are assigned an average fuel consumption value of 6.33 litres per 100 km. This value increases progressively with engine size, reaching 19.64 litres per 100 km for vehicles with engines exceeding 6,000 cc.

These benchmark values are used to compare actual fuel consumption levels of hybrid vehicles.

Under the Special Consumption Tax Law, effective from January 1st, 2026, hybrid cars, including self-charging hybrids (HEVs) and plug-in hybrids (PHEVs), are subject to 70% of the tax rate applied to petrol or diesel vehicles of the same engine displacement, provided their fuel consumption does not exceed 70% of the average value for petrol-powered vehicles in the same segment.

Following the implementation of the incentive policy, several carmakers have adjusted pricing strategies. Toyota Vietnam has applied a method based on certificates of technical safety quality and environmental protection to determine the applicable tax rate for selected hybrid models.

Prices for hybrid versions of models such as the Alphard, Camry, Corolla Cross, and Yaris Cross have been reduced by amounts ranging from VND 37 million to VND 200 million (US$ 1,400-7,700).

For models that differ in configuration from their petrol counterparts, such as seating capacity, the vehicle type comparison method does not apply. The Toyota Innova Cross HEV required the publication of the average fuel consumption table to establish the basis for determining its applicable tax rate.

According to the published data, the Toyota Innova Cross HEV has a combined fuel consumption of 4.92 litres per 100 km, which is below the threshold required to qualify for incentives.

The model is therefore subject to a special consumption tax rate set at 70% of that applied to conventional internal combustion engine vehicles.

According to some sources, shortly after the announcement of the new criteria, Toyota prepared plans to adjust the selling price of the Innova Cross HEV.

In the near term, newly launched hybrid models, including the Honda CR-V Hybrid, are expected to have their official prices determined once the assessment of tax incentive eligibility is completed.