New tax to be levied on auto imports

Thien Thanh Sanitaryware joint company

New tax to be levied on auto imports

The Government will levy a special consumption tax on cars with 24 seats and below from January 1, 2016, according to the prime minister's new decree. According to details in a number of new articles of the revised law, under the decree 108/2015/ND-CP, the new special consumption tax, which will be set equal to the importers' price, will replace the current one. It has been calculated keeping in mind their cost, insurance, and freight (CIF) value plus current import tariff.

The new calculation is expected to ensure fairness between automobile importers and domestic assemblers and producers, preventing tax fraud and tax losses to the State's budget.

The tax for imported cars with 24 seats and below will be equal to the importer's price but not lower than 105 per cent of the cost price, which includes the car's import price plus import tax and special consumption tax. If it is lower than this level, the tax will be fixed by a tax agency following regulations on tax management.

As for the 24-seater cars assembled and manufactured in Viet Nam, the tax will be equal to the carmakers' wholesale price but this price will not be lower than 7 per cent compared with the average prices of automobile businesses.

According to the General Statistics Office, Viet Nam imported an estimated 95,000 cars in the first 10 months of this year at a cost of US$2.31 billion – making year-on-year increases of 82.8 per cent and 100.2 per cent, respectively.

As is normal, people's demand of cars will increase in the last few months of the year. Therefore, the businesses are expecting to import reach more than 100,000 cars by the end of this year with the total price exceeding $2.5 billion.

Meanwhile, the total import turnover of auto spare parts reached $4.8 billion in the 10 months, 64.4 per cent higher than the same period last year.

Imported automobiles is expected to add to the boom in the domestic market in the near future as Viet Nam will reduce its car-import tax to zero per cent by 2018, under the ASEAN Trade in Goods Agreement.