Removal of excise tax on locally made auto parts under consideration
The Ministry of Finance (MoF) on March 27 said it will review opinions proposing the removal of excise tax on locally made auto parts and exempting tax of input materials for domestic automobile manufacturers.
The removal of excise tax for locally made auto parts has to be in conformity with tax laws, for which the MoF has recently submitted a proposal for a Draft Law amending and supplementing tax laws accordingly, including the Laws on Value Added Tax, Corporate Income Tax, and Special Consumption Tax.
The MoF will review opinions proposing the removal of excise tax on locally made auto parts.
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Import tax exemption of input materials for domestic automobile manufacturers, according to MoF, has been included in existing laws, namely Decree No.118/2015/ND-CP detailing and guiding the implementation of a number of articles of the Investment Law.
Consequently, the Decree No.118 stipulated the automobile supporting industries are eligible for investment incentive.
Investment projects in supporting industries are eligible for import tax exemption in 5 years since the start of production or importing materials for production.
In period 2018 - 2025, Vietnam will take steps to reduce import tariffs following the country's commitment under the 10 free trade agreements (FTAs), informed the MoF.
Substantially, the import tariffs for auto parts will be 0% as stipulated in the ASEAN trade in Goods Agreement (ATIGA) and the ASEAN - China Free Trade Area (ACFTA), leading to the most favored nation (MFN)'s tariffs of material inputs to be higher than that of final products.
MoIT and Hyundai Thanh Cong previously proposed to the MoF on exempting domestic products from excise tax, with a view to make the locally made cars affordable to the public.
Last year, a total of 272,750 units were sold, down 10% on-year, informed Vietnam Automobile Manufacturers' Association. The sales of passenger cars and commercial and special-use vehicles decreased by 15, 2, and 12%, respectively.
The falling sales were attributed to consumers' waiting for a decrease in automobile prices in early 2018 when the automobile import tariff will slip to 0% as the ATIGA took effect in the beginning of 2018.
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