Vietnam rejects automobile manufacturers' claims for car tax & fee reductions

VietNamNet Bridge – Despite a series of policies laid down recently to help ease difficulties, automobile joint ventures still demanded sharper tax and fee reductions. In reply, the Ministry of Finance said they should not expect to see all the claims to be satisfied.

Vietnam, automobile manufacturers, market, tax, transport

VAMA wanted sharp fee and tax reductions

VAMA (the Vietnam Automobile Manufacturers’ Association) petitioned to the Prime Minister, Ministry of Finance (MOF), Ministry of Industry and Trade and Ministry of Transport, requesting to apply drastic measures to rescue the automobile industry.

This was for the second time since May 2012 the association petitioned directly to the government.

Automobile manufacturers asked to apply the same single ownership registration tax rate of 10 percent on the vehicles registered in all provinces and cities. If the different registration tax rates are still applied as currently, customers would make the ownership registrations in other localities in order to avoid tax.

VAMA pointed out that it was the vehicle ownership registration tax increases of 1.5-1.7 times in Hanoi and HCM City (from 12 percent to 20 percent in Hanoi, and from 10 percent to 15 percent in HCM City), which made the automobile market frozen in 2012. The retail sales dropped dramatically by 37 percent, while sedan sales plummeted by 44 percent.

Regarding the fee aiming to restrict the number of private vehicles in circulation suggested by the Ministry of Transport earlier this year, VAMA said that the fee should be either to be applied for 7-10 years only, or removed. Prior to that, the ministry suggested the collection of VND20-50 million per car per annum in this kind of fee.

In order to possess a car, Vietnamese people have to bear a lot of types of taxes and fees, including the import tax, luxury tax, VAT, vehicle ownership registration tax, car registration fee, car number granting fee and fuel fee.

MOF gives a nod

In reply, MOF said the government agrees to the lowering of the vehicle ownership registration tax.

In 2013, the ceiling ownership registration tax rate is 10 percent. Local authorities can adjust the rates in their localities, but the rates must not higher than 50 percent of the common rate.

However, in order to see the new regulation to be brought into life, automobile manufacturers and car buyers would have to wait for the MOF to amend the government decree on ownership registration tax.

Similarly, the amendment of the luxury tax on cars is only within the jurisdiction of the National Assembly. Therefore, no change would occur in 2013, since the amendment of the law has not been put into the agenda of the National Assembly’s law reconsideration program.

The kind of fee that worried VAMA – the fee aiming to restrict private vehicles – has been removed.

MOF has reassured automobile manufacturers that in the immediate time, no new kind of tax and fee on cars would be imposed.

What automobile manufacturers want more?

They have proposed the government make public the plan on cutting import MFN tariffs in 2013-2018 and after 2018. The worry was warned three years ago already. Within ASEAN, by 2018, the import tariff on complete-built-unit cars would be 0-5 percent.

As Vietnam would cut the tariffs on CBU imports, VAMA believes that Vietnam should also cut down the tariffs on car part imports so as to make made-in-Vietnam cars competitive to import products.

VAMA, which worries about the competitiveness of its products, has proposed to maintain the validity of the Circular No. 20, which stipulates that the car importers must be authorized by the manufacturers. It has also made some proposals relating to the calculation of tax and clearance procedures.

Pham Huyen

Vietnam, automobile manufacturers, market, tax, transport