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Ambulances sit idle while MOH fights ‘luxury tax’ charge
Locked in disagreement with the Ministry of Finance over the proper tax rate (and lacking budgeted funds), the Ministry of Health (MOH) still cannot use 52 ambulances it imported six months ago. The ambulances are urgently needed for the campaign against H5N1 and H1N1 flu outbreaks.
Luxury tax shocks MOH
In July 2008, the Health Ministry ordered 52 ambulances from Hyundai Motors Vietnam (HMV). The contract stipulated that HMV had to complete the delivery to MOH by November 24.
On November 14, 2008, the consignment of ambulances arrived in Vietnam, and was verified and certified by relevant ministries. However, not until this month was the consignment of ambulances delivered to MOH.
Further, even though MOH has taken delivery the ambulances, it cannot use them. It still needs some more documents. The problem lies in its dispute with the Finance Ministry over luxury tax payment.
When it filed customs declarations on the ambulances in November, HMV was told by customs agencies to pay thirty percent of their value in luxury tax plus ten percent VAT
HMV was shocked. Like many vehicle importers, HMV did not suspect that ambulances are a product subject to luxury tax, and in addition would only bear a five percent in VAT only. HMV was told that it had to pay a total of 7.4 billion in luxury tax.
HMV sent petitions to relevant ministries about the unprecedented taxation, but they did not bring a change in the Customs Department’s position.
Thus the imported ambulances have been sitting idle for the last six months, although MOH needs them to serve the campaign against H5N1 and H1N1 flu outbreaks. Minister of Health Nguyen Quoc Trieu himself has written to the Ministry of Finance (MOF), asking the ministry to urgently clear the ambulances, so that MOH can use them for fighting a threatened pandemic.
If MOF insists that tax must be paid for the imported ambulances, MOH thinks that MOF should allocate funds to MOH so that MOH can pay the tax.
Should ambulances be taxed or not?
The Special Consumption Tax (luxury tax) enacted on November 29, 2005 did not stipulate that specially-made service vehicles like ambulances are subject to the luxury tax
Enterprises reasoned that ambulances are designed to serve as a tool to save people, not for individual consumption, and therefore should not be subject to luxury tax. Customs agencies for a long time accepted that view.
According to customs agencies, 750 ambulances have been imported to Vietnam so far. Of that number, only the 52 recently ordered by the Health Ministry are in dispute (that is, they have been subjected to the luxury tax but importers have balked at paying it). All other ambulances were cleared through customs without imposition of luxury tax and all have been put into use.
However, MOF has since then reconsidered, and directed customs agencies to collect the luxury tax in arrears on ambulances imported before April 1, 2009. As such, the importers of all 750 ambulances are threatened with a retroactive tax bill totaling 80 billion dong
How to collect 80 billion?
How to deal with the imported ambulances remain a question.
80 billion dong proves to be a big sum of money, and tax arrears collection may force some enterprises to bankruptcy.
Meanwhile, it is really very difficult to collect the tax, since most of the ambulances have been serving the healthcare projects of the state and hospitals.
Meanwhile, the tax arrears collection will really fag customs agencies.
VietNamNet, VTC
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