70th anniversary of Hanoi's Liberation Day Vietnam - Asia 2023 Smart City Summit Hanoi celebrates 15 years of administrative boundary adjustment 12th Vietnam-France decentrialized cooperation conference 31st Sea Games - Vietnam 2021 Covid-19 Pandemic
Home / Economy / Industry
Vietnam to maintain tax incentives for domestic cars beyond 2022
Hai Yen 20:42, 2021/08/04
Car manufacturers are planning to shift production chains elsewhere to Vietnam in case such tax incentives are extended.

The current tax incentives for domestically-produced cars, set to expired on December 31, 2022, are expected to be extended beyond that timeline to continue supporting the local automobile and supporting industries.

 Thanh Cong Hyundai manufacturing plant. Photo: Viet Dung

The Ministry of Finance (MoF) proposed this move as it plans to revise decree No.57/2020/ND-CP on amending import-export tariff schedules.

Under the proposal, the MoF noted a number of automobile manufacturers are considering plans to expand production activities in Vietnam or shift part of their production chains elsewhere to the country in case such tax incentives are extended.

Given the complicated procedures and large-scale investment required, car manufacturers are mapping out production plans for 2023 and onward, so policymakers should make decisions well in advance of the timeline.

According to the MoF, at a time when import tariffs for cars have been lifted under Vietnam’s commitments to free trade agreements, a supporting program for domestic cars would be necessary.

“This is the important basis for enterprises to work on their plans in subsequent years,” added the ministry.

Along with a request for extension of the tax incentives beyond 2022, the MoF is expected to keep requirements on minimum production capacity unchanged.

Under existing policies, production capacity is one of the main criteria for local automobile companies to take part in the tax incentive program, which allows them to enjoy a 0% import tariff for car parts and accessories for domestic production.

“This is necessary for local firms to continue investing in production and enhancing their capabilities,” stated the MoF.

However, such requirements may be modified to better reflect the current difficult economic climate due to the pandemic.

The Vietnam Automobile Manufacturers’ Association (VAMA) previously called for the removal of the requirement on minimum production capacity, due to a sharp decline in market demand.

TC Motor suggested those with a minimum investment capital of VND3 trillion ($130.5 million) are still qualified for the program without having to meet the production capacity requirement.

RELATED NEWS
TAG: Vietnam car manufacturers automobile tax incentive 2022 Covid-19 pandemic VAMA
Other news
17:04, 2024/06/20
Vietnam encourages people to sell excess rooftop solar power
Rooftop solar installations should be economically beneficial to residents while also enhancing national energy security.
13:44, 2024/06/19
Vietnamese Gov’t defers excise tax for domestic automakers
This year's excise tax deferral amounts to approximately VND8.56 trillion ($336 million).
22:37, 2024/06/18
Hanoi-hosted promotional event highlights tourism cooperation
Vietnam and China's province hope to better tap the tourism potential of both sides in the coming time.
17:01, 2024/06/18
"Best lychees from Vietnam” campaign launched in Thailand
This new approach aims to change the way Thai consumers perceive Vietnamese agricultural products.
12:23, 2024/06/13
Vietnam, Germany eye cooperation on energy transition
Germany stands ready to cooperate with Vietnam on energy transition through the Just Energy Transition Partnership (JETP).
11:18, 2024/06/13
Deputy PM presses for new electricity pricing scenarios in June
Any increase in electricity prices should be carefully planned in terms of size and timing to ensure market alignment, reduce losses for EVN, and meet inflation control goals.