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Finance Ministry jerks around “green auto” importers
Dozens of firms have imported hybrid (Gasoline-electric) automobiles into Vietnam. Five are gathering the documents they need to lodge a complaint about demands that they pay retroactive tariffs on the autos.
The five HCM City companies imported the hybrid cars one year ago. Classed as fuel-saving autos, they qualified for a preferential import tariff, just 70 percent of the tariff imposed on normal passenger-carrying vehicles. At that time, the tariff on normal cars was 60 percent, therefore, customs agencies collected a 42 percent tariff on the hybrids.
After clearing customs, the importers of the hybrids sold the cars to buyers here.
Now, however, the customs agency has demanded that the importers pay the ‘normal’ tariff on those cars, that is, they are being dunned for the 18 percent difference between 42 and 60 percent.
A Customs Department notice mailed on July 21 gave the companies until August 7 to pay the difference. The surprise billing seems to be based on a recent Finance Ministry ruling that the hybrids do not qualify as fuel-saving autos.
The five auto importers call the retroactive tariff collection is unreasonable, have refused to pay the additional amount, and have hired a law firm to represent them at “the higher level.”
Tran Phan Phi at Diep Hoang Tri Company told the newspaper Phap Luat TPHCM that he was amazed to receive a bill from the customs authorities at the Saigon 3 Port for an additional two billion dong assessed against the seven Lexus LS600HL and Lexus RX450 hybrid cars it imported in 2009.
The problem, says Mai Tran Thanh Hoang at the Sao Vien Dong car agency, lies in Instruction 7109, promulgated by the Ministry of Finance on June 6, which stipulates that the luxury tax due on hybrid cars is 60 percent, not the 42 percent previously imposed by customs agencies. It’s an instruction, he says, that’s based on a faulty understanding of technology and which was issued ‘after the fact’. Hoang adds that the importers had asked Finance Ministry officials for guidance before they imported the cars but had gotten no answer.
Therefore, Hoang continued, the importers had relied guidance regarding on Section 7 of the Special Consumption Tax which says that autos that run on a combination of petrol and electricity or on biofuels, if the percentage of petrol used is no more than 70 percent, would be assessed only 70 percent of the normal tariff.
“We sold the cars right after we got customs clearance. How can we get money now to pay more tax,” Phi asked, noting that the sales prices were calculated based on the tariff of 42 percent.
Car importers Phong Nga, Hoang Trong, Tam Lac and Hung Long face the same problem. One importer said he’s being dunned for several tens of billions of dong. Smaller importers fear that if they have to pay tax arrears, they may be bankrupted.
The Ministry of Finance appears to believe that the cars which were imported as hybrids – models like the Lexus HL, the Prius, Camry hybrid and Honda Insight – were in fact petrol-only models, not gasoline-electric hybrids.
The lawyer representing the five enterprises, said that a letter has been delivered to the Customs Department and the Ministry of Finance, asking for reconsideration of the decision to collect arrears.
Local newspaper vnExpress quoted its source at the Customs Department as admitting that it is very difficult to determine if the imported cars are fuel saving vehicles. According to that official, no country yet produces autos that meet the standard (Less than 70 percent reliant on petrol) that’s stipulated in Vietnam’s luxury tax and its tax preferential policies.
“What’s most amazing,” says one importer, is that the Ministry of Finance went for advice on this matter to the Vietnam Automobile Manufacturers’ Association (VAMA) which is dominated by local auto assembly companies, our business rivals!”
vietnamnet, VnExpress, PL TP HCM
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