No need to reduce the output of manufacturing and assembling automobile to enjoy preferential tariff

VCN - The Ministry of Finance has responded to the suggestions of Vietnam Automobile Manudacturers’ Association (VAMA) regarding the adjustment of reducing automobile volume to apply a tax rate of 0% for imported components and spare parts used for manufacturing and assembling automobiles. According to the Ministry of Finance, based on the current situation, the request to continue reducing the volume of VAMA is not suitable.
The government has issued many policies to support the domestic automobile manufacturing and assembly industry. Photo: ST
The government has issued many policies to support the domestic automobile manufacturing and assembly industry. Photo: ST

Commenting on the draft Decree amending and supplementing some articles of Decree No. 26/2023/ND-CP on Schedule of Export Tariffs, Schedule of Preferential Import Tariffs, Tariff nomeclature and fixed duties, mixed duties, out-of-quota import duties, VAMA proposed to revise the regulation on output at Point c.3.4, Clause 3, Article 8 of Decree No. 26/2023/ND-CP in one of two ways. Accordingly, for the case that an enterprise registers to participate in the Tax Incentive Program for 02 (two) headings of vehicles or more, have the total actual manufacturing and assembling output of vehicles of all these makes of vehicles registered within a consideration period which is at least equal to total minimum general output of vehicles belonging to respective headings of vehicles according to point a clause 5 of this Article, and meet regulations laid down in clause 2, point a, c.1. c.2 clause 4, clause 4, clause 6, clause 7 and clause 8 of this Article, they shall be entitled to the 0% duty rate applied to all components imported for use in the manufacturing and assembly of vehicles belonging to registered headings of vehicles that leave the factory within that period.

Explaining this issue, the Ministry of Finance said that the tax incentive program for automobile production and assembly is stipulated in Decree No. 125/2017/ND-CP (amended and supplemented in Decree No. No. 57/2020/ND-CP, Decree No. 101/2021/ND-CP) and recently Decree No. 26/2023/ND-CP (replacing the above Decree). Conditions for participating in the Tax Incentive Program and applying the MFN tax rate of 0% are that the enterprise has a certificate qualified to manufacture and assemble cars issued by the Ministry of Industry and Trade and meet the conditions prescribed in the Decree (including conditions on components; conditions on vehicle models; conditions on output; conditions on emissions; conditions on incentive consideration period; conditions on documents and procedures).

In particular, businesses must meet the production conditions (including minimum general output for all types of vehicles and minimum specific output for each vehicle model) following the regulations for each vehicle group. Regulations on output conditions are intended to encourage businesses to invest and expand production scale. Businesses will not enjoy the Program's preferential policies if they do not meet the output conditions during the tax incentive consideration period (6 months or 12 months). Output conditions are an important and prerequisite condition for businesses to invest capital, expand production, and increase the localization rate, thereby contributing to bringing the output of the automobile industry in the right direction and policies of the Party and the State.

According to the Ministry of Finance, in 2021, amid the impact of the Covid-19 epidemic, automobile manufacturing and assembling enterprises face many difficulties and cannot meet the output conditions of Tax Incentive Program to enjoy a tax rate of 0% on imported components and spare parts for automobile production and assembly. To remove difficulties for automobile manufacturing and assembling enterprises, the Ministry of Finance submitted to the Government to promulgate Decree No. 101/2021/ND-CP, in which, based on the calculation of factors regarding market trends and socio-economic conditions, Decree No. 101/2021/ND-CP has extended the application deadline of the Tax Incentive Program to December 31, 2027 and adjusted to reduce output in 2021 and 2022 of some vehicle groups under the Tax Incentive Program in appropriate with actual conditions. At the same time, Decree No. 101/2021/ND-CP also does not raise the issue of increasing output conditions over the years but stipulates that it remains stable for the entire period of 2022-2027. Currently, Decree No. 26/2023/ND-CP has also inherited the output regulations in Decree No. 101/2021/ND-CP.

Recently, to continue supporting businesses to restore production and business, the Ministry of Finance has submitted to the Government to promulgate Decree No. 36/2023/ND-CP extending the deadline for paying special consumption tax, especially for domestically produced and assembled cars and Decree No. 41/2023/ND-CP regulating registration fee rates for cars, trailers or semi-trailers pulled by cars and other vehicles similar to vehicles domestically produced and assembled cars (50% reduction in registration fees from July 1, 2023 to December 31, 2023). Particularly, battery-powered electric cars have been exempted from registration fees for the first time within 3 years from March 1, 2022, and registration fees are applied at 50% of the rate for cars running gasoline and diesel with the same number of seats for the next 2 years. “Thus, the Government has many policies to support the domestic automobile manufacturing and assembly industry. VAMA's continued proposal to reduce output is not appropriate for the current situation," the Ministry of Finance affirmed.

Regarding amending Decree 26/2023/ND-CP, Honda Vietnam Company proposed to include electric cars, cars using fuel cells, hybrid cars, and cars using biofuels. Cars using natural gas are manufactured and assembled within the incentive consideration period.

Regarding this issue, the Ministry of Finance said that to encourage businesses to produce and assemble environmentally friendly cars, Decree No. 57/2020/ND-CP has added environmentally friendly car lines into the Tax Incentive Program, which stipulates that the minimum general output condition for these vehicle models is 250 vehicles/year (much lower than other fossil fuel-powered vehicles such as vehicles with less than 9 seats is 23,000 vehicles/year) so that businesses can research, test and manufacture electrified vehicles in Vietnam in the early stages. At the same time, at point c.3.1, clause 3, Article 8, there is a regulation allowing the output of environmentally friendly cars to be added to the overall output of the group of vehicles using gasoline fuel when considering incentives. Thus, the current regulations in Decree No. 26/2023/ND-CP already cover emerging realities and there is no need to amend this content.

By Hoài Anh/Thanh Thuy

Related News

The auto industry does not shrink from many challenges

The auto industry does not shrink from many challenges

VCN - In the context of the import tax reduction roadmap being implemented when Vietnam participates in commitments in Free Trade Agreements, the pressure of competition on the Vietnamese automobile industry is also increasingly fierce. Therefore, in addition to tax and fee support, many breakthrough solutions and policies are needed to create a boost for the auto industry.
What to do to develop Vietnam

What to do to develop Vietnam's automobile industry when implementing FTAs?

VCN - On May 24, Customs Magazine organized a discussion on the topic "Vietnam's automobile industry implements the Free Trade Agreement: In which direction to develop?"
Take advantage to increase fruit and vegetable exports to nearby markets

Take advantage to increase fruit and vegetable exports to nearby markets

VCN - With close geographical distance, low cost and transportation time, and preferential tariffs... are great advantages that Vietnam's fruit and vegetable industry needs to take advantage of to increase exports to other Asian markets such as China, ASEAN, Middle East...
Rate of use of preferential tariffs in CPTPP

Rate of use of preferential tariffs in CPTPP

VCN - According to the Vietnam Trade Office in Canada, although the rate of using CPTPP preferential tariffs for Vietnamese exports has increased steadily over the past 5 years, there is still about USD 4 billion, or about 60% of products enjoying tax. CPTPP is equal to 0 but still cannot be taken advantage of.

Latest News

Perfecting the legality of cryptocurrencies, supporting the prevention of violations

Perfecting the legality of cryptocurrencies, supporting the prevention of violations

VCN - The addition of many regulations in Decree No. 52/2024/ND-CP on non-cash payments is considered to help meet the requirements of digital transformation and promote non-cash payments in the economy.
Hanoi Customs: thoroughly addressing concerns of processing, export production, and export processing enterprises

Hanoi Customs: thoroughly addressing concerns of processing, export production, and export processing enterprises

VCN - Processing, export production, and export processing enterprises account for 65% of the total customs declarations and 85% of the total import and export turnover through the Hanoi Customs Department. Therefore, issues related to policies and procedures for these types of enterprises are of great interest and resolution by the unit.
Calculating land rent based on the time of handover

Calculating land rent based on the time of handover

VCN - The Land Law of 2024, approved by the National Assembly on January 18, 2024, is expected to take effect on July 1, 2024, with significant changes related to land finance.
Financial policy helps strengthen state management of land

Financial policy helps strengthen state management of land

VCN - The Ministry of Finance has actively researched, urgently developed and submitted to competent authorities for promulgation according to its authority legal policies within the functions and tasks of the Ministry of Finance or actively participated with other relevant ministries, industries to develop projects and policies on real estate and housing market management, thereby contributing to the development of the real estate and social housing market.

More News

Procedures for import tax incentives for non-domestically produced raw materials and components

Procedures for import tax incentives for non-domestically produced raw materials and components

VCN - The General Department of Vietnam Customs (GDVC) has just responded and instructed Kim Long Motors Hue Joint Stock Company to carry out procedures to enjoy import tax incentives for non-domestically produced raw materials and components.
E-commerce frauds require utmost in attention from regulators

E-commerce frauds require utmost in attention from regulators

Great efforts have been made to combat counterfeit goods and trade fraud products on e-commerce channels as online shopping has become increasingly popular for many people amid booming e-commerce activities.
Is animal feed containing Formic Acid precursors "helpless" in management?

Is animal feed containing Formic Acid precursors "helpless" in management?

VCN - According to regulations, import activities of precursors must be controlled from raw materials to final products. However, there are some items containing precursors that have management inadequacies and it is not clear which sector is responsible for?
Businesses and people expect VAT cut extension to be approved

Businesses and people expect VAT cut extension to be approved

People and businesses are looking forward to the Government's proposal on extending VAT reduction in the last six months being considered and approved by the National Assembly.
Proposal to continue reducing VAT by 2% to support people and businesses

Proposal to continue reducing VAT by 2% to support people and businesses

In the first 4 months of 2024, Vietnam's economy achieved a higher growth rate than the same period of 2020-2023. However, the difficulties of the economy are still great, the recovery of the business community is still slow. Therefore, the Government has just submitted a proposal to the National Assembly for consideration, allowing to the continued implementation of the policy of reducing the value-added tax (VAT) rate by 2% for a number of groups of goods and services that are being subjected to VAT rate of 10% in the last 6 months of 2024. This is a support policy that is bringing many practical effects to people and businesses.
Research and correct customs supervision processes at international airports

Research and correct customs supervision processes at international airports

VCN - To continue to improve professional processes related to customs inspection and supervision, General Department of Vietnam Customs has drafted a decision to amend Decision No. 3280/QD-TCHQ dated September 30, 2016 on the inspection and supervision process for luggage of people on exit and entry; customs supervision activities at international airports.
Small, low-value items imported on e-commerce platforms should be taxed

Small, low-value items imported on e-commerce platforms should be taxed

Millions of packages of small, low-value items that are crossing the border into Vietnam daily should be subjected to VAT, special consumption and environmental taxes, according to industry experts and domestic e-commerce sellers.
Customs finds difficulties because there is no e-cigarette management policy

Customs finds difficulties because there is no e-cigarette management policy

VCN - E-cigarette products are invading and being used more and more commonly in our country, especially among young people, teenagers, and students. Meanwhile, there is currently no management policy for this item, making it difficult for Customs to determine violations and apply sanctions.
Are goods imported on-spot for export production eligible for tax refund?

Are goods imported on-spot for export production eligible for tax refund?

VCN - That is a problem of the Binh Duong Customs Department related to the process of handling tax refunds for goods imported to produce exported goods and exported by Thai Binh Investment Joint Stock Company.
Read More

Your care

Latest Most read
Perfecting the legality of cryptocurrencies, supporting the prevention of violations

Perfecting the legality of cryptocurrencies, supporting the prevention of violations

VCN - The addition of many regulations in Decree No. 52/2024/ND-CP on non-cash payments is considered to help meet the requirements of digital transformation and promote non-cash payments in the economy.
Hanoi Customs: thoroughly addressing concerns of processing, export production, and export processing enterprises

Hanoi Customs: thoroughly addressing concerns of processing, export production, and export processing enterprises

VCN - Processing, export production, and export processing enterprises account for 65% of the total customs declarations and 85% of the total import and export turnover through the Hanoi Customs Department. Therefore, issues related to policies and proced
Calculating land rent based on the time of handover

Calculating land rent based on the time of handover

The Land Law of 2024, approved by the National Assembly on January 18, 2024, is expected to take effect on July 1, 2024, with significant changes related to land finance.
Financial policy helps strengthen state management of land

Financial policy helps strengthen state management of land

VCN - The implementation of these policies in recent times has contributed to strengthening state management of land, encouraging organizations and individuals to use land economically and effectively, creating a stable source of income for the state budg
Procedures for import tax incentives for non-domestically produced raw materials and components

Procedures for import tax incentives for non-domestically produced raw materials and components

VCN - Appendix III on the List of areas eligible for investment incentives attached to Decree 31/2021/ND-CP of the Government stipulates economic zones and high-tech zones in an extremely disadvantaged area.
Mobile Version