New regulations on import duty on automobile components

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New regulations on import duty for automobile components. Illustrative photo: internet

The Government issued Decree No. 57/2020/ND-CP to amend and supplement some article of Decree No. 122/2016/ND-CP dated September 1, 2016 on preferential import tariffs and preferential export tariffs, list of goods and its flat tax, compound tax, and out-of-quota import tariffs and Decree No. 125/2017/ND-CP dated November 16, 2017 amending and supplementing articles of Decree No. 122/2016/ND-CP.

Of which, Decree No. 57/2020/ND-CP includes Article 7b on preferential import duty on raw materials, supplies and components for manufacturing and processing (assembly) of industrial support products prioritised for the development of automobile manufacturing and assembly industry from 2020 to 2024 (Tax Incentive Programme for automobile support industry) into Decree No. 122/2016/ND-CP.

Specifically, there is a regulation on preferential import duty rate of 0% for raw materials, supplies and components which have not been domestically manufactured for manufacturing and processing (assembly) of industrial support products prioritised for the development of the automobile manufacturing and assembly industry (automobile support products).

At registration time of declaration, customs declarants declare and calculate tax for raw materials, supplies and components at the normal import duty rate or preferential import duty rate or special preferential import duty rate as described and have not applied the duty rate of 0%.

The application of special import duty rate of 0% for raw materials, supplies and componentsunder the Tax Incentive Programme for automobile support industry complies with regulations in this decree.

The scope includes automobile component manufacturing and processing (assembly) enterprises and automobile manufacturing and processing enterprises that directly manufacture and process automobile components.

Automobile component manufacturing and processing enterprises must meet conditions as follow: have sales contract of industrial support products for automobile with automobile manufacturing and assembly enterprises; and have a certificate of eligibility for automobile manufacturing and processing issued by the Ministry of Industry and Trade;

To have a certificate of investment or certificate of investment registration or certificate of enterprise registration or certificate of business registration stating that objectives of projects or business lines including manufacturing of components and auxiliary parts for automobile or other motor vehicles; have ownership and use the right of manufacturing and processing establishments and machinery and equipment in Vietnam.

Automobile manufacturing and assembly enterprises who manufacture and process automobile components and spare parts need a certificate of eligibility for automobile manufacturing and assembly issued by the Ministry of Industry and Trade

Imported raw materials, supplies, and components must also meet conditions as described:

Enterprises who meet the above regulations and regulations described in this decree shall enjoy a preferential import duty rate of 0% for imported raw materials, supplies and components for manufacturing, processing (assembly) of industrial support products for automobile industry in the incentive consideration period.

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The maximum tax incentive consideration period does not exceed six months from January 1 to June 30 or from July 1to December 12 each year.

The decree takes effect from July 10, 2020.