An imported used car showroom on Nguyen Van Cu Street, Hanoi. (Source: VNA) The draft was recently issued by the Ministry of Finance to gather ideas fromother sectors.
Deputy head of the Tax Policy Department Nguyen Thi Thanh Hang, said it wasmeant to minimise the import of used cars and contribute to developing thedomestic automobile industry.
He also said the tax rate on most imported used cars with nine seats and lesswas currently lower than that to which Vietnam is committed with the WorldTrade Organisation (WTO). Therefore, the ministry has proposed an increase tothe highest level acceptable.
The draft shows that for vehicles of 2,500cc or more, SUVs, sport cars andpassenger cars (excluding vans), they will have a mixed tax rate calculation. Thetaxable price of used cars multiplies by 200 percent or 150 percent plus 10,000USD. As for other vehicles, the taxable price multiplies by the import tax rateon the new automobile of the same type, plus 15,000 USD.
For vehicles of 10-15 seats with an engine displacement or less than 2,500cc,the taxable price is multiplied by the import tax rate on the new automobile ofthe same type, plus 10,000 USD. Tax on cars above 2,500cc is multiplied bythe new automobile tax rate of the same type, plus 15,000 USD.
Tien Phong (Vanguard) newspaper quoted an auto shop owner saying thefinance ministry proposal would encourage consumers to buy new cars, especiallygiven that prices of locally assembled and imported cars were stronglydiscounted.
The new draft will also help stop the import of old cars, out-of-date cars fromforeign countries, which would turn Vietnam into a car dumping ground.
Nguyen Van Thanh, Director of Customs at Dinh Vu Port in the the northern cityof Hai Phong city, said the office had recently required a buyer to re-export aluxury car, which was claimed old but was new.
Thanh said the four-seater car Bentley Bentayga, which was imported from theUS, was produced in 2016 with an engine displacement of 5,950cc. The car, worth4.93 billion VND, was claimed to have run more than 10,000km and been in usefor six months. However, the kilometres’ log did not match the car’s technicalcondition.
According to statistic from the finance ministry, the number of used cars withnine seats and less has dropped in recent years due to continuously increasingimport tax. In 2013, Vietnam imported 3,777 units, but the figure was down to1,441 in 2016. The volume of used trucks has rapidly increased because thoseimported from China are cheap.
Director of Thien Phuc An Company Nguyen Tuan told the TienPhong newspaper that the used cars imported to Vietnam were mainly luxurycars with high engine displacement from 3,000cc up. However, as of July 1,2016, when the special consumption tax was raised on high engine displacementcars, most businesses stopped importing this type of vehicle.
“With the finance ministry proposal, the price of used cars will certainly riseand the gate for the used car business will become even narrower,” said Tuan.
He calculated that for a used Camry imported from the US with an enginedisplacement of 2,500cc and taxable price at 20,000 USD, the importer wouldhave to pay 19,000 USD in tax following the current import tariff. Under thedraft proposal, the vehicle’s import tax will rise to 31,000 USD per unit, plusthe special consumption tax worth 50 percent of the car value, value-added taxof 10 percent and profit of auto dealers.
If the price of a used car will be 100-200 million VND higher than of a similarbut new type, no one will buy it, said Tuan.-VNA
VNA
