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Decree No. 101/2021/N--CP amended and adjusted several contents of the tax incentive program for domestic automobile production and assembly. Photo: Internet

Modifying the tax table will remove difficulties for businesses

Since the beginning of 2021, the Covid-19 pandemic has been complicated on a large scale, affecting many aspects of socio-economic life. A number of industries such as livestock, construction, processing, and manufacturing are suffering from negative impacts due to the sudden increase in input material prices. Without timely management measures, including export tax measures, there will be many potential risks to national resources, especially non-renewable minerals for domestic production.

To stabilize the macro-economy, control inflation and promptly support and remove difficulties for domestic production and business enterprises, including the auto industry, the Ministry of Finance has coordinated with relevant agencies to submit to the Government for promulgation Decree No. 101/2021/ND-CP, dated November 15, 2021, amending and supplementing a number of articles of Decree No. 122/ 2016/ND-CP and Decree No. 57/2020/ND-CP. These amendments concern the export tariff, the preferential import tariff, the list of commodity items and their specific duty rates, compound duty rates and out-of-quota import duty rates.

According to the Tax Policy Department and the Ministry of Finance, the submission of Decree 101/2021/ND-CP will contribute to stabilizing the macro-economy, controlling inflation and promptly support and remove difficulties for domestic production and business enterprises amid the pandemic. Simultaneously, they will protect, exploit, and effectively use domestic natural resources, encourage the export of products with high added value, encourage enterprises to continuously invest, innovate technology and reduce product costs to increase competition with imported products. This will ensure simplicity, easy understanding, easy implementation, and convenience for taxpayers.

The amended contents of Decree 101/2021/ND-CP closely follow the principles prescribed in the Law on import and export taxes. Simultaneously, the decree will concretize the objectives and orientations of export and import tax policies determined by the Government in Resolution No. 63/NQ-CP and Resolution No. 58/NQ-CP, as well as guiding documents of the Government and the Prime Minister.

Taxes adjusted according to four main groups

According to the Tax Policy Department, Decree No. 101/2021/ND-CP will focus on four main groups.

First, reducing the MFN import tax rates of some commodity groups to stabilize the macro-economy and control inflation, as required by Resolution No. 63/NQ-CP and Resolution No. 58/NQ-CP. Specifically, in Decree No. 101/2021/ND-CP, the MFN import tax rates have been adjusted and reduced for a number of products such as steel, wheat, and corn. These are commodity groups with high prices in recent years, affecting input costs of many domestic manufacturing industries.

In detail, to lower domestic steel prices and promote businesses to reduce costs, the Government has adjusted and reduced the MFN import tax rates of some construction steel products, with the tax rate reduction in the range of 5% to 10%. Reductions for the the MFN import tax rate of wheat range from 3% to 0%, and for corn from 5% to 2%, to support the domestic livestock industry.

Secondly, amending the export tax rates and the MFN import tax rates for several commodities to protect and promote the efficient exploitation and use of domestic natural resources, to limit the export of raw and unprocessed resources, to simplify the tax schedule and to limit commercial fraud.

Accordingly, in Decree No. 101/2021/ND-CP, the Government has adjusted the export tax rates and the preferential import tax rates for a number of mineral resources such as stone and clinker. However, to limit the impact on businesses, give them reasonable time to adjust production, business and inventory management plans, the adjustment is made according to the roadmap. In which, stone and products made from stone are implemented according to a three-year roadmap (2022-2024) and the tax rate increase of each adjustment does not exceed 5%.

Thirdly, Decree No. 101/2021/ND-CP amended and adjusted a number of contents of the tax incentive program for domestic automobile production and assembly. According to current regulations, the tax incentive program for manufacturing and assembling cars was applied from November 16, 2017 to December 31, 2022. However, domestic automobile manufacturers and assemblers are facing increasingly fierce competition from imported cars in the context of reducing tariff barriers under the FTAs. Additionally, due to the pandemic, many fields had to stop operating for a long time. Public transport and passenger transportation has almost stagnated along with the decrease in people's income, causing a sharp decline in sales of domestic automobile manufacturing and assembling enterprises, especially buses, minibuses, and coaches.

Accordingly, to encourage enterprises to invest, expand their production scale and promote the development of the domestic auto supporting industry, Decree No. 101/2021/ND-CP has adjusted several contents of the tax incentive program for automobile manufacturing and assembling. Specifically, it has amended and supplemented regulations on the tax incentives consideration period (enterprises can choose six or 12-months) and adjusted the output conditions to participate in the Tax incentive program to suit the new context. In particular, based on results of the program, in Decree No. 101/2021/ND-CP, the Government has decided to extend the implementation of this program until December 31, 2027, so that automobile manufacturing and assembling enterprises can actively develop production and business plans in the following years. Thereby, contributing to promoting the domestic automobile industry to develop according to the orientation of the Party and State.

Fourthly, Decree No. 101/2021/ND-CP adjusted the export tax rates and the MFN import tax rates for a number of items to meet management requirements and overcome inadequacies. Specifically, to overcome the inadequacies arising in practice, the facilitation of production and business activities of enterprises. As well as to promote export development amid the pandemic, to ensure simplicity, easy understanding, ease of implementation, and convenience for taxpayers. Decree No. 101/2021/ND-CP has revised and amended some contents in Decree No. 57/2020/ ND-CP, such as, adjusting the MFN import tax rates for a number of seed products used for planting, specializing equipment for underground coal mining and adjusted conditions for applying the MFN 10% import tax rate to scar reducing gels.

Decree No. 101/2021/ND-CP has reviewed to stipulate the same tax rate for goods with different tax rates, but lacks specific criteria for classification. The application of codes has thereby simplified the tax schedule, reducing inspection costs for businesses.