Recently, the Government has a new direction oriented to the relevant ministries to continue efforts to build the automotive industry. Accordingly, the need to assess the impact of tax policy, free market and the automotive industry.
Specifically, in a recent meeting with relevant ministries and departments to find a new direction for the automotive industry in Vietnam, Deputy Prime Minister Hoang Trung Hai has assigned the Ministry of Finance and Ministry of Industry general business, assessing the situation to suggest policy directions taxes, financing for the automotive industry in the future, based on the new policy to the planning and development of the auto industry by 2020, with a vision to 2030.
Deputy Prime Minister requested the policy should have the update on the direction and policies to overcome these shortcomings, more in line with the changing economic situation, the market trend. At the same time, asked the Ministry of Finance must report reviews, analyzes specific policy on taxes, fees and charges current impact market regulation, consumer regulate how cars in the past .
The Ministry of Trade and Industry should specify the current status of development, the performance automotive industry planning, forecasting market trends, consumer demand in the country. From the report of the two ministries, the Government will consider the tax policy oriented to the automobile industry in the near future, including import tax policy to CBU vehicles, parts, taxes, fees …
In the report of the Ministry of Finance, tax policy perspective in the future for the automotive industry will be more cautious, the goal is to use taxes to create pressure off the car in the country, to ensure the benefits of consumers. The Ministry of Finance also issued circulars published special preferential tariffs with the tariffs for three years from 2012 to 2014 under the trade agreements that Viet Nam’s participation.
The Finance Ministry said it has been implementing the roadmap reduction commitment (according to the schedule reduction automobile imports from ASEAN in 2018 will be 0%; However, under the WTO, import tariffs on cars the world will be reduced to 70% in 2014 and 47% in 2017). However, with limited consumer vehicles, mainly cars below 9 seats, the view of the Ministry is to maintain high tariffs in the WTO, import tax in 2013 is 74% and will be reduced to 47% and 52% in 2019.
According to the Ministry of Finance, the biggest obstacles to building the Vietnamese automobile industry is the domestic automobile production is very low, with a localization rate reached only 15% for cars below 9 seats, 30 – 40% for vehicles over 10 seats, while the target is 50 – 60%. The main reason leading to this situation is the need low domestic demand, while investment for huge automobile production line, technology is always changing. Therefore lead to business does not focus on increasing localization rate as committed and tend to switch to simple assembly, CBU cars to commercial business. Tax policy, swipe fees on cars makes car prices in Vietnam more than 2 times the price in the U.S., high car use to make people not salty but personal car shopping, while demand own personal vehicle on a high …
To limit the import car business only instead of production, the Ministry of Finance said it will import taxes will remain at the highest level, including the tax percentage and absolute commitment WTO. As for parts, automobile spare parts import, average import tariffs for both components for vehicles less than 9 seats at 18 – 20%. Compared with the CBU car import tax rate is 74%, the distance is quite far. However, this gap has decreased significantly compared to 5 years ago (import duty components at 15%, while the CBU car import duty of 100%).
The Finance Ministry also said that when the new CBU car import tax reduced to 47% and 52% of commitments, the import tax rate components will be maintained at 18 – 20% of the current order avoid business mainly import components and accessories in the form of CKD and also encourages enterprises to invest to improve the localization rate and supporting industrial development as the current direction of the Government .
However, economic experts said solution increase import duty vehicles and CKD parts of the Ministry of Finance to promote joint ventures enhance the localization rate of Vietnamese automobile industry is not enough to “take off “because it conflicts with the tax commitment that Vietnam has signed. Therefore, in order to maintain the goal to build the automotive industry, need a total solution, long-term and more aggressive, in which the next policy support, there must be a mechanism to handle the joint venture does not do correct localization commit or regulations to encourage consumers to use domestic cars … /.