Vietnam to Lower Import Tax on Used Cars This Week

The Ministry of Finance announced the import tariff on used passenger cars will be reduced from 10-20 per cent from February 15, 2007, in a bid to boost four-wheeler sales in the country.

 

The decision has helped calm car dealers, who have recently complained about slowness in publishing the decision in the official gazette, leading to loss of business opportunity for them.

 

Dealers said demand for luxury cars has been increasing as Tet, the Vietnamese traditional Lunar New Year, comes. However, car dealers dare not import large quantities, as import tax rates remained high.

 

Under the new taxation mechanism, import duties are an absolute tax, a fixed amount of tax on a car line regardless of model, origin and price, ranging between $3,000 and $25,000, depending on engine size.

 

From February 15, secondhand cars of less than five seats will have a cut of 10 per cent on 1.0 -1.5L engine models (from $7,000 to $6,300), 15 per cent reduction on 1.5-2.0L engine models (from $10,000 to $8,500), and 20 per cent on 2.0-2.5L engine models (from $15,000 to $12,000).

 

For 10-15 seat lineup, the tariff cuts will be 15 per cent and 20 per cent on cars with engine of under 2.0L and 2.0 -3.0L, respectively.

 

The current tax rate will remain unchanged on 2.5-3L engine automobiles.

 

However, the tariff on over 5.0L engine cars will be raised by 5 per cent.

 

According to the Ministry of Finance, Vietnam lifted the ban on the import of used automobiles of 15 seats or less, but only allows cars less than five years old as of May 1, 2006.

 

However under the country’s WTO commitments, used imports are set to bear two kinds of tax: absolute tax and ad valorem tax.

 

The ministry said that this year Vietnam continued to impose the absolute tax while had yet to apply the ad valorem tax.

 

The General Department of Customs said some 500 secondhand cars had landed in Vietnam over the last six months since government revoked the ban on used imports.

 

Of this 60 per cent were luxury cars and 30 per cent were small cars with the cylinder capacity of less than 1.0L.

 

The high-end models imported in largest quantity included BMW, Mercedes and Lexus, which were prescribed whopping duties of $50,000.

 

The following table details new tariffs on imported used cars

 

Items	Current tax ($/unit)	New tax ($/unit)	Reduction/Increase rate ( per cent)
Less than five seaters ( including driver)
Under 1.0L	3,000	3,000	0
1.0 - 1.5L	7,000	6,300	-10
2.0 - 2.5L	10,000	8,500	-15
3.0 - 4.0L	18,000	18,000	0
4.5 – 5.0L	22,000	22,000	0
Over 5.0L	25,000	26,200	+5
6 – 9 seaters (including driver)
Under 2.0L	9,000	7,650	-15
2.0 - 3.0L	14,000	11,200	-20
3.0 - 4.0L	16,000	16,000	0
Over 4.0L	20,000	20,000	0
10- 15 seaters (including driver)
2.0L and lower	8,000	6,000	-15
2.0 – 3.0L	12,000	9,600	-20
Over 3.0L	15,000	15,000	0

(Vnexpress)