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Luxury tax on cars to be raised on schedule
The Ministry of Finance has affirmed that the adjustment of the luxury tax on cars will still be valid as of April 1, when the luxury tax law takes effect, denying the information that the tax increase would be delayed.
In recent days, car dealers in Hanoi and HCM City hoped inwardly that the new luxury tax application would be delayed for a time. Importers believed that a tax increase delay was necessary to ease difficulties on enterprises and stimulate demand.
In a talk with VnExpress this morning, Deputy Minister of Finance Do Hoang Anh Tuan said that the luxury tax law, which stipulates new tax rates on cars, will still be applied as of April 1 as previously scheduled.
Under the new law ratified by the National Assembly on November 14, 2008, effective April 1, cars with less than five seats and cylinder capacities less than 2.0L will bear the new tax rate of 45%. The current tax rate of 50% will still be applied to cars with cylinder capacities of 2.0-3.0L. Models of over 3.0L will bear the tax rate of 60%.
As for 6-9 seaters, the rates of 45-60% will be imposed, depending on cylinder capacity.
As for 10-16 seat vehicles used to carry people, the tax rate will remain at 30%, while the tax rate of 15% will be applied to 16-24 seat vehicles. The 15% rate will only be applied to less-than-24-seat vehicles used for carrying people and cargo.
Fearing that the tax policies may change, enterprises have been importing cars in big quantities. In the context of the economic crisis, it is better to sell products before the tax increases. It is expected that a lot of cars and new models will be launched onto the market soon before the new tax rates become effective.
The Ministry of Industry and Trade and Vietnam Automobile Manufacturers’ Association (VAMA) have sent documents to the government asking for delays of the ownership registration tax increase and the luxury tax and VAT increases, emphasising that these delays are necessary to help enterprises overcome difficulties as they still have big stocks.
According to the Ministry of Industry and Trade (MOIT), local automobile manufacturers had sold 110,000 cars by September 2008, and hoped to sell 130,000 cars by the end of the year. However, banks’ policies on tightening credit and the global financial crisis prevented this. Many workshops had to halt production, dismiss workers. VAMA has reported that its members have cut their workforces by 20-30%.
MOIT has asked the government to consider delaying the luxury tax and VAT increases applied to all kinds of vehicles. If the tax delays cannot be applied to all kinds of vehicles, they should be applied to trucks and buses, the main subjects of the automobile development plan.
VietNamNet, VNE
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