PE Bags and the Plastic Bag Environmental Tax in Vietnam

Author: Le Van Thang, Director of ICD Vietnam.

As a manufacturing business operator, I understand that costs and regulations always go hand in hand. The environmental protection tax on PE bags is one of the more complex issues that frequently puzzles both my customers and partners. This article offers the most concise and practical summary to get you straight to the point.

QUICK SUMMARY

• Quick answer: Yes, plastic bags made from PE plastic film are subject to environmental protection tax. However, the key point is that not all PE bags are taxed at the same rate.
• Tax rate: The figure to remember is VND 50,000 per kg, applied at source (manufacturer or importer).
• Exemptions: This is the most important part. The article explains the exemption cases in detail, including bags used to package pre-made products and bags for export.
• Related questions: Quick answers on VAT policy and PE film heat tolerance.

1. Vietnamese regulations on environmental tax for plastic bags

The direct answer is Yes - plastic bags (nylon bags) made from PE plastic film are subject to environmental protection tax. This surprises many of my partners and customers when they first hear it.

The legal basis is the Law on Environmental Protection Tax, which targets “taxable nylon bags” - thin bags and packaging made from single-layer HDPE, LDPE, or LLDPE film that we encounter daily. The law’s purpose is clear: to limit the mass production and use of these products.

2. What is the tax rate for PE film and PE bags?

The fixed tax rate is VND 50,000 per kilogram (kg), pursuant to Resolution 579/2018/UBTVQH14.

In practice, this is applied at source - manufacturers or importers such as ICD Vietnam declare and pay the tax. This cost is necessarily reflected in the final product price.

3. Exemption cases for PE bags

This is the most important section that many businesses overlook, enabling legitimate cost optimization. From experience, there are 2 main exemption cases that manufacturing businesses most commonly encounter:

• Bags used to package pre-made products: If you use PE bags to directly wrap a product and the bag is an inseparable part of the product’s retail packaging (e.g., bags containing individual biscuits, instant noodle packaging), you qualify for exemption.
• Nylon bags for export: All nylon bags manufactured for export are exempt from environmental tax in Vietnam.

Additionally, bags certified as environmentally friendly, or bags produced/imported by businesses to package their own products, are also exempt.

Does environmental tax apply to PE stretch wrap film?

Generally, no. PE stretch wrap film (used for pallet wrapping) is considered packaging material for protecting goods in transit, falling under the “bags used to package pre-made products” exemption. It is not a taxable nylon bag.

This is an important distinction for logistics and warehousing businesses that use large quantities of PE stretch film.

4. Related questions: VAT and heat resistance

Does PE film qualify for VAT reduction?

VAT and environmental tax are two separate taxes. VAT reduction depends on economic policy at any given time and generally does not apply to nylon bags.

A note on PE film heat resistance

LDPE film (the type used for food wrap) has relatively low heat resistance, only around 80-95 degrees C. Never use it to wrap food that is still very hot.

5. Impact of the tax policy

As someone in the industry, I see this tax policy having two effects. Economically, it is a real cost pressure on manufacturing. But from another angle, I have to acknowledge this is a necessary push, forcing businesses to think more seriously about green packaging solutions and plastic waste management.

Frequently Asked Questions

1. Does environmental tax apply to PE pallet stretch wrap?

Generally no. PE pallet wrap is classified as packaging material for protecting goods in transit and qualifies for exemption as it is used to package existing products.

2. How do you obtain environmentally friendly bag certification?

Businesses must submit a registration application and the product must meet biodegradability criteria set by the Ministry of Natural Resources and Environment.

3. Who actually pays this tax?

Legally, the manufacturer or importer pays the tax. Economically, this cost is almost always passed through to the final product price, so ultimately the end consumer bears it.