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Tuesday, June 25, 2024

Finance Ministry rejects carmakers’ tax incentive proposals

The Saigon Times

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HCMC – The Ministry of Finance has declined to support proposals put forth by Toyota and Ford to relax regulations and include certain auto parts in the list of items eligible for a 0% tax rate.

Authorities in Hai Duong Province earlier forwarded Ford Vietnam’s proposal to the Ministry of Finance and the Vietnam Automobile Manufacturers Association (VAMA), seeking to ease the conditions required to qualify for the most favored nation tariffs, particularly focusing on the production volume requirement.

However, in a recent statement sent to the Government regarding the revision of the decree specifying import-export tariff schedules, the Ministry of Finance emphasized the importance of meeting the production volume condition for eligibility for the tax incentive. According to the ministry, this requirement is intended to encourage car manufacturers to expand their investment and business operations.

Furthermore, the government has introduced numerous policies to support car assembly and manufacturing in recent times. Therefore, the proposal to reduce production volume as a requirement for a 0% tax rate is deemed inappropriate for the current situation, as per the ministry’s stance.

Similarly, the Ministry of Finance did not approve the addition of several auto parts to the list of items eligible for a 0% most favored nation (MFN) tariff, as proposed by Toyota Vietnam. The ministry explained that the tax incentive is only applicable to categories of goods that cannot be domestically manufactured, while the items proposed by Toyota could be produced locally.

According to statistics from VAMA, the total number of cars sold in the first 10 months of this year reached 235,296, down by 29% year-year-year. Of these, over 59% were domestically assembled and manufactured, while the rest were imported.

Many car manufacturers reported lower sales revenues during this period, with locally-made cars experiencing a 27% decline and completely built-up cars seeing a 33% decrease against the same period last year.

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