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Friday, July 19, 2024

Financial aid proposal for electric vehicles rejected

By N. Tan

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HCMC – The Ministry of Finance has thrown no weight behind a proposal to provide direct financial assistance to electric vehicle (EV) manufacturers and buyers, stating that the Government’s financial resources should prioritize social welfare programs over high-income earners, including EV manufacturers and buyers.

In a recent communication to the Ministry of Transport, the Ministry of Finance recommended the removal of proposals to offer tax incentives for EV manufacturing, assembly, and charging station construction.

The ministry explained its rejection by highlighting the numerous tax incentive policies the Government has already introduced for the automotive industry, including environmentally friendly and electric cars.

Regarding the Ministry of Transport’s proposal for tax incentives on imported EVs, the Ministry of Finance also opposed lowering preferential tax rates for completely built-up (CBU) imported EVs as this could negatively impact local EV assemblers and manufacturers, strain traffic infrastructure, and reduce state revenue, according to the ministry.

Regarding tax incentives for EV manufacturing, assembly, and batteries, the Ministry of Finance noted that these sectors already enjoy high tax incentives under existing laws. Tax reductions and exemptions apply not only to imported accessories and spare parts for EV manufacturing but also to materials imported for EV and EV battery production.

According to current tax regulations, goods imported by those eligible for investment incentives for building fixed assets are exempt from import duties. Therefore, the Ministry of Finance suggested that charging station construction should be included as projects eligible for investment incentives under investment law.

Previously, the Ministry of Transport proposed several tax incentive policies to promote the transition to EVs, including special consumption tax, value-added tax exemption, registration fee exemption for EVs, import duty exemption for charging station accessories and spare parts, and financial assistance for EV buyers.

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