Tax cut expected to help boost domestic automobile industry
Tax cut expected to help boost domestic automobile industry
Cars with various engine displacement values are expected to enjoy a rebate in the special consumption tax in Viet Nam as of July 1 2016, according to a revised draft on Tax Law issued by the Ministry of Finance recently.
In the draft, certain kinds of cars will receive a tax cut while some others will attract a higher tax compared to their current level of taxation.
The draft, following the Prime Minister's guidance at a meeting to consider the automobile industry's development strategy, held in July, is seen as an effort to help boost the development of this sector and reduce car prices in the domestic market.
Accordingly, the ministry will reduce tax on prioritized cars, with engine displacement below 1,000 cm3 to 2,000 cm3, by between 20 per cent and 5 per cent as of July 1, 2016. The tax will be continuously reduced till January 1, 2018.
Meanwhile, cars with engine displacement of more than 2,000 cm3 to 3,000 cm3 will be taxed at between 60 per cent to 75 per cent of its value as of next July 1, from 10 per cent to 15 per cent higher than the current levels.
A new statistic issued by the Customs Office showed that Viet Nam imported 9,504 complete built units (CBUs) in July with a total value of US$208.5 million, a 1.8 per cent fall in quantity and 32.1 per cent in value, as compared to figures of June.
The volume of imported CBUs in June and July continuously came down after the boom in the market in May with a total of 10,734 imported cars. In June, the number reached 9,678 CBUs, plunging by 9.8 per cent when compared with May.
With the new addition in import in July, the country saw a total 64,421 CBUS imported since early this year till the end of July, achieving a total value of more than $1.7 billion. This figure was nearly 7,600 units lower than that of 2014 but its value is $130 million higher than in 2014.
According to a report from the Vietnam Automobile Manufacturers' Association (VAMA), as many as 20,349 cars were sold in the Vietnamese market in July, an increase of 9 per cent compared with the previous month and 61 per cent in the same period last year. Of the sale, 15,013 were locally-assembled cars and 5,336 were imported cars.
Referring to the policy for special consumption tax and car price in Viet Nam in the future, President of VAMA Yoshihisa Maruta told a press conference, held to celebrate the association's 15th anniversary of establishment in Ha Noi recently, that one car in Viet Nam had been bearing various taxes and fees including import tax, special consumption tax, value-added tax, and registration fee, so it's difficult to foretell the time when car prices would be reduced.
However, he said VAMA and other auto businesses would make their best efforts to give customers a suitable price. VAMA members expected to maintain their production in Viet Nam and would continue to propose to the government to ensure the rights and interest of the auto makers, locally-assembled production and imported ones as well as of the customers nationwide.
Maruta said VAMA would continue co-operation with the government and relevant bodies to build and develop the Viet Nam automobile industry, increasing the rate of usage of locally-produced parts and improving production management capacity to create high quality products and service for customers.
