Imported Used Cars May Incur 642 per cent Taxes

The highest tax rate for a secondhand car imported into Vietnam may hit 642 per cent, stated a taxation mechanism proposal submitted by the Ministry of Finance to the Government for approval on March 24.

 

An imported used car has to be levied at least three kinds of taxes, namely the absolute tax (a fixed amount of tax for every car regardless of model or origin), the special consumption tax and the value-added tax.

 

According to the proposal, a car of less than five seats with an engine capacity of between 1.0 and 1.5L is likely to be subjected 642 per cent of taxes, followed by 1.5-under 2.0L cars with 615 per cent of taxes, 2.0-udner 4.0L cars with 560 per cent of taxes and cars of over 5.0L with 477 per cent of taxes.  

 

Meanwhile, cars of 5-9 seats will be imposed tax rates of between 465 per cent and 560 per cent, it said.

 

Cars of 9-16 seats will be levied 342-405 per cent taxes.

 

In order to eradicate trade frauds, the Ministry of Finance has asked the government to apply the absolute tax, a ministerial official said.

 

With this tax, wrong declarations in purchase prices will bring no benefits to traders because there is no change in taxes charged, regardless of the imported prices, he said.

 

In order to manage the quality of used cars, the ministry proposed the government to limit the entrances for used cars, said the official. “Used cars are only allowed to enter Vietnam via four international ports in Saigon Port, Haiphong Port, Cai Lan Port and Danang Port,” he added.

 

The permission for the entry of used cars into the country is being protested by local carmakers. Several carmakers such as Toyota and Isuzu have temporarily suspended production because they cannot sell their products.

 

Car sales by 11 operational foreign-led carmakers in the country were down 21 per cent to 2,894 units in the first two months of this year.

 

 

Engines capacities	Prices (US$) (est.)  (1)	Absolute tax (US$) (2)	Special consumption tax (US$) (1+2)*50% (3)	VAT (1+2+3)*10% (4)	Total Taxes (2+3+4)
Under 1.0L	1,000	3,000	2,000	600	5,600
1.0-under 1.5L	2,000	7,000	4,500	1,350	12,850
1.5-under 2.0L	3,000	10,000	6,500	1,950	18,450
2.0-under 3.0L	5,000	15,000	10,000	3,000	28,000
3.0-under 4.0L	6,000	18,000	12,000	3,600	33,600
4.0-under 5.0L	8,000	22,000	15,000	4,500	41,500
5.0 onwards	10,000	25,000	17,500	2,550	47,750

(Source: The Ministry of Finance)