Proposal to extend payment deadline for excise tax on domestically manufactured, assembled cars

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Ministry of Finance proposes to extend the payment deadline for excise tax on domestically manufactured, assembled cars

Excise tax on domestically manufactured and assembled cars is decreasing

According to the Ministry of Finance, following the Government’s resolutions on supporting businesses in the context of the Covid-19 pandemic and the economic recovery program, for three consecutive years from 2020 to 2022, the Ministry of Finance has submitted to the Government to issue Decree No. 109/2020/ND-CP dated September 15, 2020, Decree No. 104/2021/ND-CP dated December 4, 2021, and Decree No. 32/2022/ND-CP dated December dated May 21, 2022, on the deadline for paying excise tax for domestically manufactured and assembled cars to support and restore production and business due to the impact of the Covid-19 pandemic.

As a result, as of March 15, 2023, 12 enterprises have applied for an extension. As a result, the deferred tax amount totalled VND9,603 billion. Therefore, the total amount paid into the state budget is VND 8,871 billion, and the remaining is VND 731 billion.

Speaking about the amount of excise tax paid in January 2023 of 12 domestic automobile manufacturing and assembling enterprises, the Ministry of Finance said the total amount of tax payable is VND1,024 billion, of which VND1,008 billion has been paid to the State budget, the remaining tax payable is VND15.9 billion.

Regarding the continuation extending the deadline for paying excise tax on domestically manufactured and assembled cars in 2023, in this report, the Ministry of Finance clarifies the pros and cons of two cases of not extending and extending the payment deadline of excise tax for domestically produced and assembled cars.

In the case of non-extension, it will help Vietnam ensure compliance with WTO’s national treatment regulations and FTAs that Vietnam participates in, including the EVFTA.

However, the disadvantage of this case is that the domestic automobile manufacturing and assembly market may face difficulties and challenges mentioned by the People’s Committees of Quang Nam and Ninh Binh provinces and the enterprises and associations involved in domestic automobile assembly and manufacturing (increasing bank interest rates, low credit limit arising in the fourth quarter of 2022 and predictions about difficult situations for the financial and credit markets in 2023).

Supporting business recovery is necessary

Currently, there are a total of 12 automobile manufacturing and assembling enterprises nationwide. Experiencing the outbreak of the epidemic with many difficulties and challenges, thanks to the right support through the Government’s policies, the domestic auto industry has recovered its growth and sales in 2022 higher than in 2019.

However, based on the declared data by domestic automobile manufacturers and assemblers, the output and amount of excise tax on domestically manufactured and assembled cars are decreasing. Specifically, from October 2022, the declared output was 25,571 cars with the corresponding excise tax amount of VND 3,884 billion; in November 2022, the declared output was 23,658 cars with the corresponding excise tax amount of VND 3,412 billion, down VND472 billion compared to the previous month; In December 2022, the excise tax amount was VND3,218 billion, down VND194 billion from the previous month.

In January 2023, the excise tax amount was VND 1,442 billion, down by VND 1,776 billion year-on-year, with a corresponding declared output of 9,766 vehicles. Furthermore, excluding the prolonged holiday (because it is the month of the Lunar New Year), the excise tax declared in January 2023 also decreases by about VND200 billion compared to the adjacent month.

Thus, according to the Ministry of Finance, if implementing the plan to extend the payment deadline, it will continue to support domestic automobile manufacturers and assemblers to recover and develop production and business as proposed by Quang Nam and Ninh Binh provinces and associations and businesses. Moreover, at the end of the extension, the automobile manufacturers and assemblers must pay the full tax amount into the state budget.

Regarding the disadvantages of the option of extending the payment deadline of excise tax, the Ministry of Finance said that if the extension of the deadline for excise tax payment on domestically manufactured and assembled cars continues, it may create concerns and reactions from stakeholders related to the provisions on WTO’s national treatment and the FTAs that Vietnam participates in, including the EVFTA. Therefore, the application period of the Decree extending the deadline for paying excise tax for domestically manufactured and assembled cars should not be expanded.

Based on considering the above options, the Ministry of Finance proposes to extend the payment deadline for excise tax on domestically manufactured and assembled cars according to the plan in Decree No. 32/2022/ND-CP.

Specifically, extending the payment deadline for the tax payable of the tax period of June, July, August and September 2023 for domestically manufactured and assembled cars. The extension is from the end of the time limit for paying excise tax following the law on tax administration. Accordingly, the deadline for paying excise tax incurred in the tax period of June, July, August and September 2023 is no later than November 20, 2023.

With the above tax payment extension plan, it is expected that the average amount of excise tax on domestically manufactured and assembled cars in the following months in 2023 will be about VND 2,600 - 2,800 billion. Accordingly, the total deferred excise tax on cars manufactured and assembled in the country in four tax periods as the proposed plan is about VND 10,400 billion - VND 11,200 billion.

Regarding the procedures for issuing the Decree, according to the Ministry of Finance, the extension of the deadline for paying excise tax for domestically manufactured and assembled cars has been implemented in 2020, 2021 and 2022 according to the provisions of Decree No. 109 /2020/ND-CP, Decree No. 104/2021/ND-CP, Decree No. 32/2022/ND-CP. If the Government allows the formulation of a decree on the payment deadline for 2023, the Ministry of Finance shall submit to the Government for approval of the formulation of a decree according to the simplified order and procedures.