Proposal to extend the deadline for paying excise tax in 2022 for domestically manufactured and assembled automobiles

The Ministry of Finance has just drafted the Government's report and decree on the deadline extension of the excise tax payment for domestically manufactured and assembled automobiles. Source: Internet

Domestic production and assembly of automobiles affected by Covid-19 pandemic

According to the Ministry of Finance, the fourth wave of Covid-19 in many provinces and cities in 2021 had constrained the recovery of the auto market.

To comply with the anti-pandemic directive of the local authorities, many auto retailers, including Toyota, Ford and Mitsubishi, based in Hanoi and Ho Chi Minh City have to temporarily stop operations, especially in the period from June to September 2021.

Not only sales but the car factories of some automakers are also affected by the lack of chips and assembled components due to the disruption of the global supply chain. There has never been a year where the Vietnamese auto market has experienced as much turbulence as 2021.

Covid-19 has left an unforgettable mark on the whole market when sales plummeted. It can be said that domestic automobile production and assembly is an area affected by the pandemic that needs support from the State.

The Ministry of Finance also said that Article 63 of the Law on Tax Administration No. 38/2019/QH14 (effective from July 1, 2020) stipulates that the Government decides on the extension of tax payment for entities, industries, businesses that encounter special difficulties in each period. The extension of tax payment does not lead to an adjustment of the state budget revenue estimate decided by the National Assembly. Therefore, the extension of payment of excise tax for domestically manufactured and assembled automobiles has been implemented in 2020 and 2021 following the provisions of Decree No. 109/2020/ND-CP and Decree No. 104/2021/ND-CP.

In order to support domestic automobile manufacturers and assemblers following Resolution No. 11/NQ-CP, the Ministry of Finance submits to the Government for promulgation a Decree extending the deadline for paying excise tax for automobiles manufactured and assembled domestically in 2022 as stipulated in Chapter XII of the Law on Promulgation of Legal Documents.

The elaboration and promulgation of legal documents should comply with simplified order and procedures.

On average, revenue collection is reduced by about VND170-250 billion each month

Implementing the assignment of the Government, the Ministry of Finance has drafted the Government's Report and the Government's Decree on the extension of excise tax payable on domestically manufactured and assembled automobiles and sent to the Ministry of Planning and Investment, the Ministry of Industry and Trade, the Ministry of Foreign Affairs and the Vietnam Chamber of Commerce and Industry for consultation, and collect the opinions of the Ministry of Justice to submit to the Government for promulgating the Decree following the simplified order of procedures.

According to the provisions of Article 44 of the Law on Tax Administration No. 38/2019/QH14 and Article 8 of Decree No. 126/2020/ND-CP, business establishments shall declare excise tax on a monthly basis and the deadline for tax payment is the 20th of the following month.

To avoid the impact of the extension of the deadline of excise tax payment in 2022 for domestically manufactured or assembled cars on an adjustment of the state budget revenue estimate, the Ministry of Finance shall submit to the Government a proposal on extending the tax payment deadline for excise tax payable arising in the tax period of June, July, August and September of 2022 for domestically manufactured and assembled cars.

The extension is from the end of the time limit for paying excise tax in accordance with the law on tax administration. Specifically, the deadline for paying excise tax incurred in the tax period of June, July, August and September 2022 is no later than November 20, 2022.

The extension applies to the case of making an additional declaration of tax dossiers of the extended tax period and applies to enterprises that have branches and affiliated units engaged in the actual production or assembly of automobiles carrying out excise tax declarations separately with the tax agency directly managing it.

Regarding the order and procedures for requesting an extension, the draft proposed that taxpayers eligible for an extension shall send an application form (online or send a paper copy directly to the tax office or by postal service) to the tax agency for all extended periods together with the time of submission of excise tax declaration dossiers. In case the application for a deadline extension is not submitted at the same time as the submission of the excise tax dossier, the deadline for submitting the application is November 20, 2022.

In the case that, during the extension period, the tax authority determined that the taxpayer is not eligible for the extension, or after the extension period expires, the tax authority discovers that the taxpayer is not eligible for the extension. Then the tax authority shall notify the taxpayer about the suspension of the extension and the taxpayer must pay the full amount of tax and late payment interest during the extension period into the state budget.

During the extended period of excise tax payment, tax authorities will not charge late payment interest for the extended excise tax amount. In case the tax authority has charged late payment interest for the excise tax declarations that are extended following the regulations specified in this Decree, the tax authority shall make the adjustment without charge of late payment of excise tax.

The Ministry of Finance has submitted to the Government for allowing the decree to take effect from the date of signing because it is an urgent solution that needs to be issued immediately to promptly support domestic automobile manufacturers and assemblers.

To ensure strictness, the Ministry of Finance shall submit to the Government for regulating that, after the extension period according to this Decree, the payment of excise tax for domestically manufactured or assembled automobiles must comply with current regulations; assigned the Ministry of Finance to implement and handle problems arising during the implementation of the Decree.

Based on the business situation and payment of excise tax in the whole year of domestic automobile manufacturing and assembling enterprises in the years from 2019 to 2021; Simultaneously with the assumption of implementing Law No. 03/2022/QH15, because the excise tax rate on electric vehicles is low enough to increase consumer demand, the demand for gasoline-powered vehicles will be replaced by electric vehicles, the Ministry of Finance planned to reduce revenue collection by about VND2,000-3,000 billion, an average of VND170-250 billion per month.

Thus, the total excise tax amount expected to be extended for four periods (from the tax period June to September) is about VND9,300-11,400 billion.