Vietnam firm on auto industry development plan
Vietnam firm on auto industry development plan
Despite calls for a rethink of a controversial automotive industry development plan, the Government of Vietnam has shown no sign of swaying as new incentives are being drafted to keep the plan afloat.
The Ministry of Finance is drafting a law designed to provide a slew of new tax incentives for operational and new auto projects in a fresh bid to develop the auto industry into a strong one.
Under the draft law which amends some provisions in a range of laws on taxes, auto enterprises could enjoy a corporate income tax rate of 10% for 15 years plus a tax exemption in the first four years and a tax reduction of 50% in nine following years.
The tax incentives would go to manufacturers of priority cars if they meet requirements for capital, employment and capital disbursement as well as new projects which produce key parts like engines and gearboxes.
The ministry explained such revisions aim to ensure the incentives for enterprises in the industry will be in line with the Investment Law and Vietnam’s commitments to the trade agreements signed with foreign partners. The ministry added amendments to some regulations on corporate income tax and special consumption tax as required by the Prime Minister.
On July 18, the Government office said the PM assigned the Ministry of Finance to coordinate with the Ministry of Industry and Trade and relevant agencies to revise special consumption and corporation income tax policies for auto projects and pass them to the National Assembly at the tenth session.
As for special consumption tax, low rates would be applied to priority cars but high rates would be imposed on cars that are fuel-consuming, of large , have engine capacity of over three liters and high levels of emissions.
According to the Ministry of Finance, import tariffs on autos from ASEAN countries will be lowered to 0-5% in 2018 and tariffs on auto parts imported from Japan and South Korea will be 20-25%.
To encourage the use of fuel-efficient cars, ASEAN countries will levy low special consumption tax rates on autos with small engine capacities and those using clean energy. The average tax is 15-30% for autos with engine capacity of two liters but the tax is very high for those with engine capacity of over three liters such as 125% in Indonesia, 105% in Malaysia and 90% in Laos.
As per the Prime Minister’s instruction and tax rates in ASEAN countries, the finance ministry said special consumption tax amendments and corporate income tax incentives are urgent to back the development of the auto industry.
According to the ministry, Vietnam should focus on manufacturing compact, fuel-saving cars and those suitable for domestic roads and people’s incomes, and promoting projects producing important auto parts.
The draft law amends and supplements seven laws on taxes, including corporate income tax, personal income tax, value-added tax, special consumption tax, tax on use of non-agricultural land, environmental protection tax and tax management.
