Circular 10 2025 on the avoidable cost tariff and the content of the power purchase agreement issued? Does the avoidable cost tariff include VAT in Vietnam?
Vietnam: Circular 10 2025 on the avoidable cost tariff and the content of the power purchase agreement issued?
On February 1, 2025, the Ministry of Finance issued Circular 10/2025/TT-BCT stipulating the methodology for determining and the principles for applying avoidable cost tariffs for small renewable energy power plants; the content of the power purchase agreements.
Circular 10/2025/TT-BCT provides detailed guidance on Clause 5, Article 44, Point g, Clause 1, Article 51, Point e, Clause 1, Article 51 of the Electricity Law 2024 concerning the methodology for determining and principles for applying avoidable cost tariffs for small renewable energy power plants; the content of power purchase agreements.
Additionally, Circular 10/2025/TT-BCT applies to the following entities:
- Organizations, individuals buying or selling electricity from small renewable energy power plants;
- Units operating the electricity system and electricity market, and other relevant agencies, organizations, and individuals.
Furthermore, according to Article 3 of Circular 10/2025/TT-BCT, the structure of the avoidable cost tariff includes 07 (seven) components as follows:
- Dry season peak hours;
- Dry season normal hours;
- Dry season off-peak hours;
- Rainy season peak hours;
- Rainy season normal hours;
- Rainy season off-peak hours;
- Surplus electricity.
>>> View the full text of Circular 10 2025 here
Circular 10 2025 on the avoidable cost tariff and the content of the power purchase agreement issued? Does the avoidable cost tariff include VAT in Vietnam? (Image from the Internet)
What are regulations on the avoidable cost tariff in Vietnam?
Based on Article 4 of Circular 10/2025/TT-BCT stipulating the avoidable cost tariff as follows:
(1) The avoidable cost tariff is constructed and published annually.
(2) By October 31 each year, the unit operating the electricity system and electricity market is responsible for leading, in cooperation with Vietnam Electricity and relevant units, to update the database, perform calculations, draft the avoidable cost tariff for the following year using the methodology stipulated in Appendix II issued with Circular 10/2025/TT-BCT, and submit it to the state electricity regulatory authority at the Ministry of Industry and Trade.
(3) Within 5 working days from the receipt of the avoidable cost tariff dossier as mentioned in Clause 2, Article 4 of Circular 10/2025/TT-BCT, the state electricity regulatory authority at the Ministry of Industry and Trade is responsible for checking the contents of the dossier submitted. If necessary, the state electricity regulatory authority at the Ministry of Industry and Trade may issue a document requesting the unit operating the electricity system and electricity market to amend, supplement, or clarify the dossier contents. No later than 15 working days from the receipt of the request to amend, supplement, or clarify the contents of the dossier from the state electricity regulatory authority at the Ministry of Industry and Trade, the electricity system and market operating unit is responsible for sending a report explaining the dossier contents as requested.
(4) Within 30 working days from receiving the complete avoidable cost tariff dossier and the clarification report from the electricity system and market operating unit, the state electricity regulatory authority at the Ministry of Industry and Trade is responsible for:
- Appraising the input parameters and the calculation results of the annual avoidable cost tariff established by the electricity system and market operating unit. If necessary, relevant organizations and individuals may be invited to participate in the appraisal;
- Researching, proposing, and submitting to the Minister of Industry and Trade for review and decision the reasonable level of avoidable cost tariff to encourage electricity production from renewable energy, while ensuring that the avoidable cost tariff aligns with the country's economic and social conditions in each period.
(5) Within 2 working days from the issuance of the avoidable cost tariff, the state electricity regulatory authority at the Ministry of Industry and Trade is responsible for announcing the avoidable cost tariff for the following year on the electronic information page of the state electricity regulatory authority at the Ministry of Industry and Trade and of the Ministry of Industry and Trade.
(6) In cases where the avoidable cost tariff is not announced on time, it is permitted to temporarily apply the previous year's avoidable cost tariff until the new avoidable cost tariff is announced. The difference caused by payments according to the old and the new avoidable cost tariff will be reconciled in the first payment using the new avoidable cost tariff.
Does the avoidable cost tariff include VAT in Vietnam?
Based on Article 3 of Circular 10/2025/TT-BCT, the provisions are as follows:
Structure of the avoidable cost tariff
- The avoidable cost tariff (excluding water resource tax, forest environment service fees, water resource exploitation rights fees, value-added tax, and other fees, taxes, charges if regulated by competent state authorities) is calculated based on usage time during the day and seasons within the year, detailed in Appendix I issued with this Circular, including 07 (seven) components as follows:
...
According to the above provisions, the avoidable cost tariff does not include water resource tax, forest environment service fees, water resource exploitation rights fees, value-added tax, and other fees, taxes, charges if regulated by competent state authorities.
Thus, the avoidable cost tariff does not include VAT (value-added tax).
