7:44:50 PM | 18/9/2008
The Ministry of Industry and Trade (MOIT) has asked for permission from the National Assembly’s Standing Committee to have the luxury tax on 6-9-seat cars cut by 10 per cent, Deputy Minister of Industry and Trade Bui Xuan Khu said in a dispatch sent on September 9.
MOIT believes that Vietnam should support manufacturers’ localization plan and encourage the local automobile industry by applying preferential tax rates on 6-9-seat cars.
The 6-9-seat cars are multi-purpose vehicles (MPV) which mainly serve families’ transportation needs and are well suited to the current infrastructure and traffic situation in Vietnam, Khu said.
The models also are the focus of the automobile manufacturers’ localization plan. Toyota’s Innova model, for example, has locally made content of around 37 per cent.
The tax rates on 6-9-seat cars should be 10 per cent lower than 5-seat models. Taxes on models with cylinder capacity of less than 2.0L should be at 40 per cent, while the rate on 2.0-3.0L vehicles should be 50 per cent and 60 per cent for 3.0L and above.
MOIT also proposed maintaining the tax rates suggested by the Ministry of Finance (MOF) for other vehicle classes.
The luxury tax bill, compiled by MOF, was put forward for the discussion at the regular meeting of the National Assembly’s Standing Committee in late August 2008.
MOF proposed to impose the tax rates of 50 per cent on less-than-10-seat cars with cylinder capacities of 2,000 cc and less, 60 per cent on vehicles with cylinder capacities of 2,000 -3,000 cc, and 70 per cent on over 3,000 cc vehicles.
The tax rates would be the same for both locally made products and imports.
MOF thinks that the currently applied tax rate of 30 per cent on 6-15-seat cars proves to be unreasonable. The 6-10-seat models are mainly used for personal traveling, but they are hit with 60 per cent of the 50 per cent tax rate on five-seaters.
In dispatch No. 4678 dated Jun 4, MOIT had agreed to the proposed tax rate, going so far as to apply two measures to limit the number of cars on the roads, including the re-imposition of the automatic import licensing scheme and another regulation which forces importers pay taxes at customs.
As the result of the application of the two measures, the number of imported vehicles decreased sharply in July and August.
However, two months later, MOIT changed its mind, proposing to apply preferential taxes on 6-9-seat cars.
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