The Ministry of Industry has submitted a proposal related to tax policies on automobiles and automotive components to prime minister Phan Van Khai. In the proposal, the ministry requested to apply a common special consumption tax rate against both locally made and imported vehicles.
The SCT rate levied on imported vehicles is now 80% and locally manufactured vehicles is 40%.
The industry ministry petitioned the prime minister Khai to prolong the itinerary of ending the reduction of SCT for imported automobiles to 2012. The reason given is aiming to reduce difficulties for local automobile manufacturers and makers.
For some main automobile components and spare parts that are applied import duty much lower than the import tariffs on importation of completed vehicles, to minimise the acts of avoiding laws, the ministry requested Khai to increase the equivalent rate to 70% compared with the import duty against imported complete vehicles.
Increasing the import duty against imported secondhand vehicles to 200% compared with the unused same vehicles. Increasing the import duty rate in the prevailing preferential import duty list applied to 20–45 tonne lorries to 30%, specialised vehicles to 20% to boost localisation and minimise commercial frauds.
The Ministry of Industry said that the import duty rate levied on separate automobile components and spare parts will be not more than 30%, and maintain the gap between the import duty rate on grouped components and average import duty rate on each component at 10–15% to encourage manufacturers to pay attention to investing in upgrade of production lines instead of importing bundles of complete components to assemble. The gap of 5% is considered only in some special cases.
The Ministry of Industry requested that the government needs to issue more appropriate tax policies and traffic infrastructure development policies to create favourable conditions for further expanding consumer demand. On the other hand, the government also must force automobile manufacturing businesses to increase localisation rate in the country’s auto industry development strategy to 2010 and 2010 outlook.
Secondhand automobile components will be liable to an import duty rate of 150% compared with the unused ones.
The Ministry of Industry requested the prime minister to add 20–45 tonne lorries and more than 45 tonne lorries to the list of vehicles that have heavy dead weight to ensure the issuance of the tariff duty list against imported components and spare parts.
Prior to issuance of the new import duty list, the industry ministry requested the Ministry of Finance to classify into six types of vehicles: under nine seat vans, more than nine seat vans, under five tonne vans, from five to 20 tonne vans, from 20 to 45 tonne vans and over 45 tonne vans to build the import duty list for each type of vehicles.
In addition, the government needs to maintain the import duty rate against CKD components and separate components in one-year so that businesses and state agencies have times to prepare.