At the Vinfast automobile factory (Photo: kinhtenongthon.vn) Hanoi (VNS/VNA) - The Government’s decision tooffer a zero-import tax rate on automobile components opens significantopportunities for the local industry to lower prices, enhance competitivenessand promote consumption.
Under the Government’s Decree No 57/2020/ND-CP, dated May 25,the import tax rate on automobile components would be cut from July 10 in aneffort to promote the domestic automobile production and assembly industry in2020-2024period.
This would mean that more automakers would enjoy the tariffcompared to those regulated in Decree 125/2017/NQ-CP dated November 16, 2017.
In the previous decree, automakers must reach regulatedoutput levels to enjoy the tax incentive, which benefits only producers withhigh output. For example, companies must produce at least 8,000 nine-seat carswith cylinder capacity of 2,500 cc or less in 2018 and 13,500 cars in 2022 tobe eligible for the tariff.
Notably, firms which import automobile components which hadnot been produced domestically to supply automakers would also enjoy the taxincentive, according to the new decree.
Le Ngoc Duc, Director of TC Motor, was quoted by onlinenewspaper Vietnamnet that the tax incentive would help narrow down the gaps inprice competitiveness between domestically assembled cars and those importedfrom ASEAN.
However, the competition remained harsh. It was estimatedthat the tax incentive would help reduce production cost of domesticallyassembled cars by about 15-17 percent. In comparison, cars imported from ASEANwere enjoying zero import tax, meaning that their prices were 23-25 percentlower.
Automakers were expecting more incentives so that they couldfurther lower their prices to be able to compete with those imported fromASEAN, Duc said.
The Government was also considering amendments to the specialconsumption tax on cars, which, if passed, was expected to give a boost to thelocal automobile industry.
The domestic automobile industry was anticipated to faceincreasing competition as import tax on cars would be gradually cut to zero inthe next 10 years following commitments to the Comprehensive and ProgressiveAgreement for Trans-Pacific Partnership (CPTPP) and the EU-Vietnam Free TradeAgreement (EVFTA).
Customs statistics showed that Vietnam imported automobilecomponents worth 4.16 billion USD in 2019, from 3 billion USD in2015, mainly from the Republic of Korea, Japan, China and Germany.
In the first four months of this year, automobile componentimports totalled 1.16 billion USD, a slight decrease against the same period in 2019 due tothe impacts of the COVID-19 pandemic.
The Government officially gave nod to a 50 percent reductionin registration fees for buyers of locally manufactured cars which washighlighted in the Resolution No 84/NQ-CP dated May 29 about measures to removedifficulties for business and production and accelerate disbursement of publicinvestment in the post-pandemic period.
However, it is unknown when the reduction would come intoforce, while it would expire by the end of this year.
In the market, buyers tended to delay their purchase decisionuntil they could enjoy the reduction, which would amount to dozens of millionsof đồng per car. The registration fee is two percent, according to the DecreeNo 140/2016/ND-CPdated October 10, 2016.
Pham Dinh Thi, Director of theMinistry of Finance’s Tax Policy Department, was quoted by Zing.vn as sayingthat a decree on the registration fee reduction was being developed and wouldbe issued soon. The draft neared completion and would be raised for comments,Thi said, adding that the process for issuance of this decree would beshortened.
The Ministry of Industry and Trade’s statistics showed thatautomobile sales saw a considerable drop in recent months due to the COVID-19pandemic – by 23.8 percent in April and 26.9 percent in May.
According to the Vietnam Automobile Manufacturers Association (VAMA), its members sold 10,816 carsin April, 46 percent lower than the same month of 2019./.
Under the Government’s Decree No 57/2020/ND-CP, dated May 25,the import tax rate on automobile components would be cut from July 10 in aneffort to promote the domestic automobile production and assembly industry in2020-2024period.
This would mean that more automakers would enjoy the tariffcompared to those regulated in Decree 125/2017/NQ-CP dated November 16, 2017.
In the previous decree, automakers must reach regulatedoutput levels to enjoy the tax incentive, which benefits only producers withhigh output. For example, companies must produce at least 8,000 nine-seat carswith cylinder capacity of 2,500 cc or less in 2018 and 13,500 cars in 2022 tobe eligible for the tariff.
Notably, firms which import automobile components which hadnot been produced domestically to supply automakers would also enjoy the taxincentive, according to the new decree.
Le Ngoc Duc, Director of TC Motor, was quoted by onlinenewspaper Vietnamnet that the tax incentive would help narrow down the gaps inprice competitiveness between domestically assembled cars and those importedfrom ASEAN.
However, the competition remained harsh. It was estimatedthat the tax incentive would help reduce production cost of domesticallyassembled cars by about 15-17 percent. In comparison, cars imported from ASEANwere enjoying zero import tax, meaning that their prices were 23-25 percentlower.
Automakers were expecting more incentives so that they couldfurther lower their prices to be able to compete with those imported fromASEAN, Duc said.
The Government was also considering amendments to the specialconsumption tax on cars, which, if passed, was expected to give a boost to thelocal automobile industry.
The domestic automobile industry was anticipated to faceincreasing competition as import tax on cars would be gradually cut to zero inthe next 10 years following commitments to the Comprehensive and ProgressiveAgreement for Trans-Pacific Partnership (CPTPP) and the EU-Vietnam Free TradeAgreement (EVFTA).
Customs statistics showed that Vietnam imported automobilecomponents worth 4.16 billion USD in 2019, from 3 billion USD in2015, mainly from the Republic of Korea, Japan, China and Germany.
In the first four months of this year, automobile componentimports totalled 1.16 billion USD, a slight decrease against the same period in 2019 due tothe impacts of the COVID-19 pandemic.
The Government officially gave nod to a 50 percent reductionin registration fees for buyers of locally manufactured cars which washighlighted in the Resolution No 84/NQ-CP dated May 29 about measures to removedifficulties for business and production and accelerate disbursement of publicinvestment in the post-pandemic period.
However, it is unknown when the reduction would come intoforce, while it would expire by the end of this year.
In the market, buyers tended to delay their purchase decisionuntil they could enjoy the reduction, which would amount to dozens of millionsof đồng per car. The registration fee is two percent, according to the DecreeNo 140/2016/ND-CPdated October 10, 2016.
Pham Dinh Thi, Director of theMinistry of Finance’s Tax Policy Department, was quoted by Zing.vn as sayingthat a decree on the registration fee reduction was being developed and wouldbe issued soon. The draft neared completion and would be raised for comments,Thi said, adding that the process for issuance of this decree would beshortened.
The Ministry of Industry and Trade’s statistics showed thatautomobile sales saw a considerable drop in recent months due to the COVID-19pandemic – by 23.8 percent in April and 26.9 percent in May.
According to the Vietnam Automobile Manufacturers Association (VAMA), its members sold 10,816 carsin April, 46 percent lower than the same month of 2019./.
VNA
