Imported cars are expected to become more expensive by around 5 percentif the finance ministry's draft plan to adjust the calculation ofspecial consumption tax on imported automobiles is approved.
Underthe current regulations, the special consumption tax on importedautomobiles is calculated on their cost, insurance, and freight valueplus current import tariff.
However, the draft plan suggests thatthe special consumption tax on imported cars with less than 24 seatswill be calculated on the basis of the current special consumption taxplus the domestic sale fee of importers. The domestic sale fee should becalculated on the basis of fees paid for services such as packing,managing, advertising, displaying, transporting, and the warranty plusinterest of tax payers.
The domestic sale fee will be levied on importers when cars are sold.
The new calculation method is expected to cause an estimated 5-per-cent increase in the prices of imported cars.
Accordingto the ministry, in comparison with locally-assembled vehicles, thecurrent calculation of the special consumption tax on imported cars willcreate more competitive advantages for imported products in terms ofprices.
It further said that the Vietnam Association ofAutomobile Manufacturers and many local businesses have complained thatthe current calculation of special consumption tax on imported cars hasbeen unfair, particularly in the context of Vietnam's internationalcommitment to cut import tariff on automobiles from ASEAN countries tozero percent by 2018.
Many local automobile importers fear thatthe ministry's proposal will create difficulties for them and willsurely push car prices higher.
They noted that importers willhave to go through more procedures to pay tax. They will have to pay thespecial consumption tax, which will be calculated after they completeall car import procedures, and then pay the domestic sale fee aftertheir cars are sold.
They added that the new method will alsoforce businesses to restructure their operations, from transporting,marketing and even warranty services, to ensure returns.
Meanwhile,the ministry has invited businesses, importers, and associations togive their opinion on the draft plan. The deadline to send theiropinions to the ministry is May 20.
The draft plan will besubmitted to the Prime Minister for approval in June; if approved, itwill take effect from January 1, 2016.
From1998 till date, thespecial consumption tax on automobiles has been revised four times inkeeping with the trend of regular reductions. Earlier in 2009, the taxwas levied, based on the number of seats in cars. From 2009 till date,the tax has been calculated on the cylinder capacity of cars.
From1999 to 2003, a sedan with five seats or lower was taxed 100 percent ofthe car's value, while cars with six to 15 seats had to pay 60 percentof their value.
From 2004 to 2005, tax on a sedan with five seatsor lower was reduced to 80 percent of their value, while cars with sixto 15 seats had to pay 50 percent.
From 2006 to March 31, 2009, asedan with five seats or lower received a tax cut to 50 percent, whilecars with six to 15 seats were asked to pay 30 percent of their value.
FromApril 1, 2009, till date, 45 percent, 50 percent and 60 percent astaxes have been levied on cars that have nine seats and lower, with acylinder capacity of below two litres, between two and three litres, andmore than three litres, respectively.-VNA
Underthe current regulations, the special consumption tax on importedautomobiles is calculated on their cost, insurance, and freight valueplus current import tariff.
However, the draft plan suggests thatthe special consumption tax on imported cars with less than 24 seatswill be calculated on the basis of the current special consumption taxplus the domestic sale fee of importers. The domestic sale fee should becalculated on the basis of fees paid for services such as packing,managing, advertising, displaying, transporting, and the warranty plusinterest of tax payers.
The domestic sale fee will be levied on importers when cars are sold.
The new calculation method is expected to cause an estimated 5-per-cent increase in the prices of imported cars.
Accordingto the ministry, in comparison with locally-assembled vehicles, thecurrent calculation of the special consumption tax on imported cars willcreate more competitive advantages for imported products in terms ofprices.
It further said that the Vietnam Association ofAutomobile Manufacturers and many local businesses have complained thatthe current calculation of special consumption tax on imported cars hasbeen unfair, particularly in the context of Vietnam's internationalcommitment to cut import tariff on automobiles from ASEAN countries tozero percent by 2018.
Many local automobile importers fear thatthe ministry's proposal will create difficulties for them and willsurely push car prices higher.
They noted that importers willhave to go through more procedures to pay tax. They will have to pay thespecial consumption tax, which will be calculated after they completeall car import procedures, and then pay the domestic sale fee aftertheir cars are sold.
They added that the new method will alsoforce businesses to restructure their operations, from transporting,marketing and even warranty services, to ensure returns.
Meanwhile,the ministry has invited businesses, importers, and associations togive their opinion on the draft plan. The deadline to send theiropinions to the ministry is May 20.
The draft plan will besubmitted to the Prime Minister for approval in June; if approved, itwill take effect from January 1, 2016.
From1998 till date, thespecial consumption tax on automobiles has been revised four times inkeeping with the trend of regular reductions. Earlier in 2009, the taxwas levied, based on the number of seats in cars. From 2009 till date,the tax has been calculated on the cylinder capacity of cars.
From1999 to 2003, a sedan with five seats or lower was taxed 100 percent ofthe car's value, while cars with six to 15 seats had to pay 60 percentof their value.
From 2004 to 2005, tax on a sedan with five seatsor lower was reduced to 80 percent of their value, while cars with sixto 15 seats had to pay 50 percent.
From 2006 to March 31, 2009, asedan with five seats or lower received a tax cut to 50 percent, whilecars with six to 15 seats were asked to pay 30 percent of their value.
FromApril 1, 2009, till date, 45 percent, 50 percent and 60 percent astaxes have been levied on cars that have nine seats and lower, with acylinder capacity of below two litres, between two and three litres, andmore than three litres, respectively.-VNA
