Revising SCT on automobiles must ensure harmony of benefits

VCN - At the Workshop "Draft regulations on revising special consumption tax (SCT) on automobiles: Impacts and Recommendations" organized by the Central Institute for Economic Management (CIEM) on August 1, many multi-dimensional comments of experts and businesses have mentioned the impacts of the SCT policy on automobile products, especially on electric cars.
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The Ministry of Finance is presiding over the development of a draft Law on SCT (revised) with amendments to a number of important contents. In particular, the SCT Law aims to orient the economical consumption of fossil fuels and encourage the use of environmentally friendly motor vehicles; catch up with development trends; and ensure consistency with the relevant legal system.

Emphasizing the importance of this Tax Law because the SCT directly impacts consumption choices, affecting production and business activities of automobile industry enterprises, Nguyen Minh Thao, head of the Business Environment and Competitiveness Research Department under CIEM said that automobiles are one of the products regulated by the SCT Law.

The draft Law submitted by the Ministry of Finance contains amendments related to this product. These amendments will certainly have a major impact on businesses in the automobile industry as well as businesses in the production, business chain, and providing products and services to the industry.

At the workshop, comments focused on identifying and discussing impacts of the draft regulations on revising SCT on automobiles, including gasoline-powered cars combined with electric energy and cars and double cabin pick-up trucks. At the same time, there are many opinions about the problems and difficulties of automobile industry enterprises.

According to a representative of KPMG Tax and Consulting Co., Ltd., the automobile industry in Vietnam is in an important transition period. In the world, the trend of electrification of the automobile industry is becoming increasingly popular and Vietnam is no exception to this trend.

Although the growth potential for environmentally friendly automobiles in Vietnam is reinforced by commitments in international agreements on environmental protection and climate change prevention, the transition process in the automobile industry is still facing many difficulties, including the economic decline after the Covid-19 pandemic, geopolitical tensions, inconsistent development of infrastructure as well as power generation sources and potential competition from foreign low-cost electric vehicle manufacturers.

Accordingly, the representative of this company proposed to SCT incentives for gasoline –powered vehicles combined with electric energy (Hybrid vehicles). Specifically, for self-charging hybrid electric vehicles (HEV), the proposed tax rate is 70% of the tax rate applicable to gasoline and diesel- powered cars of the same type (currently 100%).

For plug-in hybrid electric vehicles (PHEVs), the proposed preferential tax rate is 50% of the tax rate applicable to gasoline and diesel- powered cars of the same type (currently 100%).

Regarding the impact of this proposal on the state budget, KPGM representative said that according to the basic plan, state budget revenue from 2026 to 2030 is about nearly VND782 trillion. If incentives are applied, state budget revenue in this period will reduce nearly VND23.55 trillion to nearly VND758.387 trillion.

In addition, the Vietnam Automobile Manufacturers Association and KPGM also proposed to maintain the current SCT rate on double cabin cargo pick-up vehicles (15%, 20% and 25% depending on cylinder capacity).

According to Ms. Tran Hong Nguyen, Deputy Head of the National Assembly's Law Committee, the promulgation of the SCT Law (amended) is necessary, but due to the impact of the Covid-19 pandemic and developments in the economic situation in the world, the promulgation of this law needs to pay attention to harmony in policies, a suitable roadmap for businesses to develop, people to have jobs, ensure budget revenue.

Some experts believe that, along with the goal of encouraging production and supporting consumers, management policies also have long-term goals such as urban development, environmental protection, infrastructure development, and meeting international commitments. Therefore, these policies must also be synchronized with SCT policies to ensure both short-term and long-term goals, and have the impact sharing of all stakeholders.

Ms. Nguyen Thi Cuc, President of the Vietnam Tax Consulting Association also said that it is necessary to ensure harmony of benefits of related parties as well as ensure harmony of goals in developing SCT policy. If the policy is appropriate and feasible, it will help businesses develop and help the state collect more taxes.

By Hoai Anh/ Huyen Trang

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