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Sunday, June 23, 2024

Finance Ministry rejects 50% registration fee cut request again

By N. Tan

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HCMC – The Ministry of Finance has reiterated its rejection of a proposal to reduce 50% of the registration fee for local car manufacturers.

The ministry wrote to the prime minister on April 28, stating that domestically manufactured and assembled cars should not be entitled to a 50% registration fee cut as proposed by some localities.

According to the Ministry of Finance, a 50% registration fee cut for local car manufacturers might lead to a rise in the number of cars to be sold and revenue of value-added tax and special consumption tax.

However, only eight localities where local car manufacturers are headquartered collect value-added tax and special consumption tax. But the car registration fee cut will affect budget revenue of all cities and provinces.

Additionally, the policy will violate Vietnam’s international commitments.

The ministry proposed considering two options in case the prime minister approves the registration fee cut.

First, a 50% registration fee cut is applied to domestically manufactured and assembled cars. This policy will boost consumption and support local car manufacturers but reduce budget revenue by around VND9,000 billion if the policy is valid in six months, and violate the country’s international commitments.

Second, the registration fee cut is applied to both local car manufacturers and auto importers. Besides stimulating demand, this option will ensure compliance with international commitments to which Vietnam is a signatory, said the ministry, adding that this will affect the local budget revenue.

In early March, industry associations and localities proposed that the Government allow for an excise tax payment extension and a 50% registration fee reduction for domestically made and assembled cars. After that, auto importers made the same proposal for their products.

Several days ago, the Ministry of Industry and Trade threw its weight behind a proposal for a 50% registration fee cut on domestically manufactured and assembled cars by the end of this year.

The Ministry of Finance also proposed the prime minister extend excise tax payments for locally made cars for the tax period from June to September. Thus, the deadline for excise tax payments will be on November 20.

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