Domestic automakers are set to enjoy an extension of excise tax payment until the end of this year, a necessary move from the Government to aid businesses amid current pandemic hardship.

Car production at VinFast. File photo

The move was revealed in the recently released Government’s Decree No.104, which allows local car producers/assemblers to delay their respective excise tax payment deadline in October and November until December 30 at the latest.

The decree, set to take effect on December 4, also covers car branches and dealers under the management of local automakers. It also stipulated that the extension would cease to be valid once the deadline expired.

During the first half of 2021, revenue from the excise tax on domestic cars was estimated at VND19.5 trillion ($845.4 million).

The Ministry of Finance (MoF) expected revenue from the excise tax on domestic cars to average VND2.2 trillion ($95.3 million) in the final months of this year. This would result in around VND4.4 trillion ($190.7 million) of excise tax subject to extension, but the MoF noted this would not affect the performance of budget collection this year.

For the 11-month period, tax revenue already exceeded the year’s estimate by 5.1% to VND1,180 trillion ($51.12 billion) with one month to go, representing an increase of 7.5% year-on-year.

Last year, the Government issued Decree No.109/2020/ND-CP on the deferral of excise tax payment on the payable amount incurred in the tax periods of March to October 2020  for domestic car manufacturers or assemblers.

Under the MoF’s calculation, deferring excise tax payment would help improve enterprises’ working capital and maintain businesses activities, while promoting the development of the local automobile industry.

Around 13 local firms from eight provinces/cities have been qualified for support measures stipulated in Decree No.109 with the total amount of tax payment of VND19.2 trillion ($842 million) being delayed, including major names such as Hyundai Thanh Cong Ninh Binh with VND4 trillion ($175.4 million), Toyota Vietnam (VND3.2 trillion or $140.3 million), or Vinfast (VND2.5 trillion or $110 million).

A report from the Vietnam Automobile Manufacturers’ Association (VAMA) noted the Covid-19 pandemic continued to pose negative impacts on the local auto market, with the number of cars sold during the 10-month period at 197,222 units, down 3% against the same period of last year.

To boost the market, the MoF has also proposed a 50% cut in the registration fee for domestically- produced or assembled cars.