News

Proposing new excise tax calculation and prices of domestic cars tend to be reduced

Summary

Proposing new excise tax calculation and prices of domestic cars tend to be reduced

Updated on : 17-08-2017


Proposing new excise tax calculation and prices of domestic cars tend to be reduced

VCN- On the afternoon of 15th August 2017, the Ministry of Finance held a press conference introducing the Law on the amendment of Value Added Tax Law, the Excise Tax Law, the Personal Income Tax Law and the Resource Tax Law.

          Mr. Pham Dinh Thi, the Director of the Tax Policy Department.

Removing the domestic factors from the price

One of the contents considered as a breakthrough in this Law is the change in excise tax calculation prices to encourage enterprises to increase localization rates, creating conditions for domestic automobiles to compete with imported automobiles in the context of integration.

Mr. Pham Dinh Thi, the Director of the Tax Policy Department, under the Ministry of Finance, said that according to Article 6 of the Law on Excise Tax, the regulation stipulates that for domestically produced goods, prices are regulated by the production or import facilities.

Regarding this regulation, the Ministry of Industry and Trade said that the above regulations had not really encouraged enterprises to increase localization rate, not creating conditions for domestic products to compete with imported goods, which meant that the localization rate for 9-seat vehicles was still lower than the target.

Therefore, in order to encourage enterprises to increase the localization rate, lower production costs and improve the competitiveness of domestically-made automobiles and imported cars, the Ministry of Industry and Trade proposed to change the price of excise tax calculation for domestically produced vehicles, not to be subject to excise tax for domestic added value (parts and accessories) in order to increase the competitiveness of domestic assembled products, encouraging automotive manufacturers to raise the domestic value added content.

On that basis, in the Bill, the Ministry of Finance submitted to the Government 2 options. The first option is that the excise tax calculation price for domestically produced cars of 9 seats or less is the price sold by the production unit minus the value of components and spare parts produced in the country as proposed by the Ministry of Industry and Trade. The second option is preserved as current, excise tax calculation price for domestically produced cars of 9 seats or less is the price sold by the production unit (excluding domestic components and spare parts).

Although there are two options to submit, the Ministry of Finance is also inclined to option 1 to encourage domestic cars to develop, but this option may face the risk of violation of WTO commitments.

Regarding concerns of the reporter, Mr. Pham Dinh Thi said: One of the principles when joining the WTO is not to discriminate between domestic production and imports. However, through the study of international experience, some countries are also implementing this policy. Moreover, facilitating domestic production, increasing the localization of automobiles will help create more jobs, and so on.

"The level of using depends on the specific production situation of the countries. In order to avoid this risk, the Deputy Prime Minister, Mr. Vuong Dinh Hue has directed the Ministry of Justice and the Ministry of Industry and Trade together with the drafting committee to fully assess the contents to make the regulations strictly”, Mr. Thi said.

Increasing tax for pickup truck

Related to automobiles, in the Bill, the Ministry of Finance proposed to adjust the excise tax rate for both passenger and pickup cars. According to Mr. Thi, the goal to achieve from this policy is to contribute to consumption orientation; to suit the purpose of the type of car for both passenger and cargo, in accordance with international practice.

Answering the reporter about the basis for adjustment, Mr. Thi stated: According to the provisions of the current Law on Excise Tax, both passengers and cargo cars are subject to an excise tax rate of 15% for cars of cylinder capacity of 2,500 cm3 or less; 20% for cars of cylinder capacity of 2,500 cm3 to 3,000 cm3; and 25% for cars of cylinder capacity of over 3,000 cm3.

In recent years, the number of pickup trucks and consumer cars increased rapidly, specifically: In 2012, 3,291 vehicles were sold. In 2016, the number of cars sold reached 28,233 vehicles, which was nearly by 8.6 times.

Because these vehicles have lower excise tax rates than passenger cars with the same number of seats (SUVs with the excise tax rate of over 2,500 cc to 3,000 cc of 55%), some consumers tend to switch to a pickup truck instead of an SUV.

In order to contribute to orienting consumption of pickup trucks and suitable for the purpose of using this type of vehicle, the Deputy Prime Minister, Mr. Trinh Dinh Dung has assigned the Ministry of Finance to study and re-evaluate the excise tax rate of the pickup truck for timely adjustment to suit the purpose of using this vehicle.

Also, on 28th April 2017, the Ministry of Industry and Trade also proposed to apply excise tax rates for both passenger and cargo cars with a transport volume of less than 1,500 kg and less than 5 seats as well as cars under 9 seats.

Through the review, the Ministry of Finance found that countries in the region tended to apply excise tax rates for both passenger and freight cars at rates lower than the rates for cars of less than 9 seats.

Therefore, in order to ensure proper use of vehicles, the Ministry of Finance proposed to apply the excise tax rate of 60% equal to the tax rate for cars of the same cylinder capacity. It has a gross tonnage of between 2,000 and 3,000 c3, so if the tax rate is 55%, such as a car of 9 seats or less, the tax rate of the pickup car is 33%.

By Hong Van/ Hoang Anh


Most Recent News


Search All News

Member Area

Search this Site
Contents
 

Contact Us!

If you cannot find what you require in this website please feel free to contact us. Click here to send us a message   >>>

 

 

Upcoming Events