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MOIT proposes preferential taxes for 6-9-seat cars
The Ministry of Industry and Trade (MOIT) has asked the National Assembly’s Standing Committee’s permission to have the luxury tax on 6-9-seat cars cut by 10%.
In a dispatch sent on September 9, Deputy Minister of MOIT, Bui Xuan Khu, wrote that 6-9-seat cars are multi-purpose vehicles (MPV) which mainly serve families’ transportation needs and are well suited to the current infrastructure and traffic situation in Vietnam. The models also are the focus of the automobile manufacturers’ localisation plan. Toyota’s Innova model, for example, has locally made content of around 37%.
MOIT believes that Vietnam should support manufacturers’ localisation plan and encourage the local automobile industry by applying preferential tax rates on 6-9-seat cars. The tax rates on 6-9-seat cars should be 10% lower than 5-seat models. Taxes on models with cylinder capacity of less than 2.0L should be at 40%, while the rate on 2.0-3.0L vehicles should be 50% and 60% for 3.0L and above.
MOIT proposed maintaining the tax rates suggested by the Ministry of Finance (MOF) for other vehicle classes.
The luxury tax bill, compiled by MOF, was put forward for the discussion at the regular meeting of the National Assembly’s Standing Committee in late August 2008. MOF proposed to impose the tax rates of 50% on less-than-10-seat cars with cylinder capacities of 2,000 cc and less, 60% on vehicles with cylinder capacities of over 2,000 -3,000 cc, and 70% on over 3,000 cc vehicles. The tax rates would be the same for both locally made products and imports.
MOF thinks that the currently applied tax rate of 30% on 6-15-seat cars proves to be unreasonable. The 6-10-seat models are mainly used for personal traveling, but they are hit with 60% of the 50% tax rate on five-seaters.
In dispatch 4678 dated June 4, MOIT had agreed with the proposed tax rate, going so far as to apply two measures to limit the number of cars on the roads, including the re-imposition of the automatic import licensing scheme and another regulation which forces importers pay taxes at customs.
As the result of the application of the two measures, the number of imported vehicles decreased sharply in July and August.
However, two months later, MOIT changed its mind, proposing to apply preferential taxes on 6-9-seat cars.
The tax rates proposed by MOIT and MOF
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Models |
Cylinder capacity (cc) |
MOF suggested tax rates (%) |
MOIT proposed tax rates (%) |
|
Five -seaters |
less than 2,000 cc |
50 |
50 |
|
2,000-3,000 cc |
60 |
60 |
|
over 3,000 cc |
70 |
70 |
|
Six-nine-seaters |
less than 2,000 cc |
50 |
40 |
|
2,000-3,000 cc |
60 |
50 |
|
over 3,000 cc |
70 |
60 |
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