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Official Gazette

Monday, July 6, 2020

Excise tax exemption proposed for locally made automobile parts

Updated: 09:59’ - 13/07/2017
The Ministry of Industry and Trade (MoIT) has proposed non-imposition of excise tax on locally made auto parts in order to bring the prices of cars, especially assembled ones, more accessible to customers.

The MoIT also proposed the Government to assign the Ministry of Finance to adjust the most favored nation (MFN) tariffs on auto components and parts.

The new tax incentive is expected to help promote manufacture of cars in the country__Photo: Internet

Under current regulations, excise tax is imposed on the whole value of a car, while according to the ministry’s proposal, locally made automobile parts would be exempted from this tax. Therefore, automobile prices would be reduced as such exemption also leads to reduction of value-added tax, marketing costs, corporate income tax and registration fee.

According to the import duty reduction roadmap to 2018, import tariffs on automobiles from ASEAN will be zero percent, thus causing difficulties to domestic automobile manufacturing and assembling enterprises.

An automobile expert predicted that locally assembled car prices would probably be equivalent to the regional average rates from 2018. “Vietnamese people can buy cars at the same prices as the Thai in the coming years,” he added.

However, he noted, the prices would not fall sharply in one year or two years after the application of this new method of tax calculation.

“It takes time to attract auto parts firms to Vietnam and for existing auto companies to upgrade their workshops and modernize production technologies,” he said.

The new tax incentive is expected to help promote manufacture of cars in the country instead of importing completely built-up automobiles or making completely knock-down ones.

To develop the country’s automobile industry, Vietnam would need a long-term steady policy framework, a strict legal corridor and a potential market with simplified administrative procedures and tax and charge incentives, according to experts.

Regarding the proposal to increase excise tax on compact pickup trucks, Bui Quang Chuyen, Chairman of the Members’ Council of Vietnam Engine and Agricultural Machinery Corporation, said the prices of such trucks would be nearly doubled if excise tax increased from 25 percent at present to 90 percent. This might make domestic pickup manufacturing and assembling businesses become bankrupt and also create conditions for imported automobiles to flood the domestic market.

He suggested the State carefully consider such proposal in order to help customers access reasonable car prices.- (VLLF)


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