Vietnam Gov't Raises Tax on Imported Luxury Cars

HANOI, May 6 Asia Pulse - The Vietnamese Government has allowed the Ministry of Finance to revise the special consumption tax on automobiles, raising it for some high-end cars models. Currently, automobiles are subject to a uniform special consumption tax of 50 per cent.

In late April, the Ministry of Finance asked the Government to permit it to adjust the special consumption tax on automobiles, raising taxes on the imported luxury car brands that account for a considerable portion of the country's trade deficit.

Imports of automobiles and automobile parts and equipment saw a sharp rise in the first four months of 2008 at US$4991 million up 333 per cent year-on-year.

Of this figure, CBUs (completely built units) accounted for US$483 million.

The Ministry of Finance is currently compiling a report on the efficacy of special taxes in curbing consumption, collecting suggestions from other ministries and agencies on approaches to the issue.

The Government has assigned the Finance Minister to deliver the completed report before the National Assembly for consideration.

On April 21, 2008, the import tax rate for automobiles was officially raised by the Ministry of Finance from 70 per cent to 83 according to Decision No 17/2008/QD-BTC, dated April 17, 2008.

The ministry said that despite increasing the import tax on automobiles from 70 to 83 per cent, imports of CBUs remained high.

Earlier, on March 11, the Ministry of Finance made a decision on the years first increase in the import taxes on automobiles, from 60 per cent to 70 per cent.

Last month the import tax rate for car parts also increased, from 3 per cent to 5 per cent.

As result, a further adjustment of the special consumption tax is essential to regulate the market, limit consumption and prevent increased traffic congestion.

The special consumption tax is applicable to automobiles, tobacco beer and other alcoholic beverages.

Domestically-made cars with less than five seats are subject to a 50 per cent tax, vehicles with 6-15 seats are taxed at 30 per cent and vehicles with 24-26 seats are taxed at 15 per cent.

According to the Ministry of Finance, a tax rate of 80 per cent, 85 per cent or even 90 per cent would still be permissible within Vietnam's WTO commitments.

(VNA)

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