New trade, auto rules to usher positive changes

Foreign traders not present in Viet Nam will have the right to export or import under Vietnamese law and international treaties that the country has signed. - Photo cafef.vn

This is one of several positive changes expected in the business environment as a set of new policies that take effect early this year.

The changes will directly impact import and export, production and business activities, officials have said.

As the country integrates deeper into the global economy, importers and exporters have paid great attention to the Law on Foreign Trade Management, which is expected to improve the management of foreign trade activities in Viet Nam.

It is the first time that several provisions on anti-dumping, anti-subsidies and other safeguards are being written into law, and these are expected to make it easier to resolve trade disputes, thereby facilitating foreign trade.

They stipulate that foreign traders not present in Viet Nam can engage in export or import in compliance with provisions of Vietnamese law and international treaties that Viet Nam is a party to.

The law specifies administrative measures like prohibiting, restricting or stopping the import and export of particular goods or services as warranted by circumstances.

It also deals with the application of technical measures, especially those relating to hygiene and sanitation.

Auto industry hit

Under the ASEAN Free Trade Agreement (AFT) commitments, a zero per cent tax will apply on cars imported from the bloc with a localisation rate of 40 per cent or more in the country or origin.

The models most imported from the ASEAN market, especially Thailand, Indonesia and Malaysia, include pickup trucks, Toyota Fortuner, Honda CR-V, Ford Everest and Toyota Yaris.

In an effort to boost the national automobile industry in the context of the zero import tax, the Vietnamese Government has issued Decree No. 125/2017/ND-CP, approving the application of zero tax on auto parts imported from ASEAN nations so that locally assembled cars can be cheaper.

Enterprises eligible for this tax incentive will have to meet conditions relating to manufacture, assembly, import, warranty services and auto maintenance set in the Decree 116/2017/ND-CP.

Under Decree 116, importers have to get an automobile importing business licence from the Ministry of Industry and Trade. To qualify for this, importers must have appropriate warranty and maintenance facilities and be authorised by the manufacturers in exporting countries to conduct recalls in Viet Nam if needed.

Decree 125 also changes regulations on used cars in an effort to minimise their imports. Specifically, cars with nine seats or less (including drivers) and engine displacement under 1,000cc will attract a flat tax of $10,000 each, double the current rate.

Used cars with engines of 1,000cc displacement or more and passenger cars of 10-15 seats are subject to varied tax rates. Accordingly, for vehicles with engine displacements of between 1,500cc and below 2,500cc, the tax will be calculated thus: a tax rate of between 150 and 200 per cent on the taxable price, plus $10,000. For used vehicles of 2,500cc or more, $15,000 will be added to the tax rate of between 150 and 200 per cent on the taxable price.

The businesses must also commit to producing and assembling vehicles that meet Euro 4 emissions standards (from 2018 to 2021) and Euro 5 (from 2022 onwards).

According to the revised Special Consumption Tax Law, effective January 1, 2018, passenger cars with nine seats and less and engine displacement of 2,000cc and less will enjoy a five per cent reduction in special consumption tax, which means the rate goes down from 45 per cent 40 per cent.

The New Year has also witnessed new actions from the Vietnam Register on emission standards for cars and motorbikes.

As of January 1, the agency has stopped registering or granting technical safety certificates for newly-manufactured, assembled or imported autos that use diesel engines with emission levels below Euro 4 standards. Euro standards are a series of emission control standards compiled by the European Union for all new land vehicles. Euro 6, currently the highest standard, is widely used across European countries.

Experts have said the leading cause of air pollution in Viet Nam is from various means of transport, particularly engine-run vehicles, necessitating strict limits on their emissions.