Tax on Secondhand Cars Likely to Be Cut

The import tariff on secondhand passenger vehicles in to Vietnam will be gradually reduced in accordance with the international commitments, a Ministry of Finance official said.

 

The tax rates and the tax cut roadmap are being discussed with concerned partners, Deputy Minister of Finance Truong Chi Trung said.

 

“Thus, the new tax rates are not available at the moment,” Trung reinstated, adding that the new rates will be lower than the current levels.

 

At present, Vietnam is subjecting the absolute tax on used passenger cars of less than 16 seats. The absolute tax is a fixed amount of tax for every car in a line regardless of price, model or origin. The absolute tax ranges between US$3,000 and US$25,000, depending on engine sizes.

 

In the meantime, the import duties on new cars are 90 per cent.

 

The special consumption tax and the value added tax on new and used cars are the same at respectively 50 per cent and 10 per cent.

 

However, the value of the used cars will be driven up by an average of 600 per cent when the combined duties of the absolute tax, special consumption tax and VAT are added.

 

According to carmakers, the changed taxation mechanism has frozen the Vietnamese automobile market because potential car buyers have been prompted to delay purchasing orders in anticipation of discounted products.

 

The auto output was down 39.6 per cent to 9,537 units in the first four months of this year, according to the General Statistics Office (GSO).