The Ministry of Finance proposed to reduce import tax on automobiles with HS codes 8703.23.63, 8703.23.57, 8703.24.51 to 32%.

The Ministry of Finance is proposing to adjust the preferential import tax rates (MFN) for a number of automobile products to diversify the supply of imported cars, promote competition in the market and build a tax system in line with the development trend of the domestic automobile industry.

According to current regulations, vehicles with HS codes 8703.23.63, 8703.23.57 and 8703.24.51 are subject to relatively high MFN import tax rates.

For HS code 8703.23.63, this is a line of passenger vehicles with a common luggage compartment and sports cars (except for 4-wheel drive sports cars), with a cylinder capacity of over 2,000cc but not exceeding 2,500cc.

Currently, the MFN import tax rate is 64%; the WTO ceiling commitment is 70%. The special preferential import tax rate in the ASEAN Trade in Goods Agreement (ATIGA) is 0%, not committed in the Vietnam-Japan Economic Partnership Agreement (VJEPA), the Comprehensive Economic Partnership Agreement (AJCEP).

The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) tax rate is 31.8%; other Free Trade Agreements (FTAs) range from 0 - 78%. Special consumption tax is 50%, environmental protection tax is not collected, value added tax is 10%.

In 2024, the total import turnover of this car line is 40.8 million USD. Accordingly, the import turnover subject to MFN tax is 11.8 million USD (accounting for 29%) and the import turnover under the free trade agreement (FTA) is 29 million USD (accounting for 71%). The MFN import tax rate is 64%; the WTO ceiling commitment is 70%.

HS code 8703.23.57 applies to sedan cars with a cylinder capacity of over 2,000cc but not exceeding 2,500cc. The MFN import tax rate is 64%; the WTO ceiling commitment is 70%.

The special preferential import tax rate in ATIGA is 0%, not committed in VJEPA, AJCEP. The CPTPP tax rate is 31.8%; other FTAs ​​are from 0 - 78%. Special consumption tax is 50%, environmental protection tax is not collected, value added tax is 10%.

The total import turnover in 2024 of HS code 8703.23.57 is 13.23 million USD; of which there is no import turnover subject to MFN tax; the import turnover under FTA is 13.23 million USD (accounting for 100%). HS code 8703.24.51 is applied to other 4-wheel drive car lines.

Currently, the MFN import tax rate is 45%; the WTO ceiling commitment rate is 47%. The special preferential import tax rate in ATIGA is 0%, not committed in VJEPA, AJCEP.

CPTPP tax rate is 25%; other FTAs ​​are from 0 to 59%. Special consumption tax is 90%, 110%, 130%, 150% depending on cylinder capacity; environmental protection tax is not collected, value added tax is 10%.

With this code, the import turnover subject to MFN tax is about 8.1 million USD (accounting for 11.36%) and the import turnover under FTA is 63.19 million USD (accounting for 88.64%).

According to the Ministry of Finance, the Vietnamese automobile market currently has a size of about 510,000 vehicles/year.

Of these, domestic production and assembly output reached 338,000 vehicles/year, while the remaining 173,000 vehicles were imported, mainly from ASEAN countries applying a FTA tax rate of 0%. Compared to other countries in the region, the Vietnamese automobile market is still quite small.

The Ministry of Industry and Trade predicts that by 2030, the demand for automobiles in Vietnam could reach 1 to 1.1 million vehicles per year. Thus, within the next 5 years, the domestic automobile industry needs to double its current growth rate to meet market demand.

Currently, domestic automobile manufacturers mainly focus on low-capacity vehicles (under 2,000cc), which are suitable for most consumer needs, while higher-capacity vehicles are mainly imported because there is no suitable domestic production facility.

The Ministry of Finance said that the import turnover of all three car lines mainly comes from countries with special preferential import tax rates, of which Thailand enjoys incentives under the ATIGA Agreement and Japan under the CPTPP Agreement.

Reducing MFN tariffs could boost trade flows, making high-end cars more affordable for consumers.

However, car consumption trends do not only depend on tax rates but are also influenced by many other factors such as tastes, prices, after-sales services, and fuel consumption.

Besides, because cars are valuable assets, Vietnamese people often tend to choose popular car models on the market.

At the same time, the domestic automobile manufacturing industry has yet to develop large-capacity vehicles, so demand for this segment must mainly rely on imports.

Therefore, the Ministry of Finance proposes to adjust and reduce MFN tax for the above three HS codes.

Accordingly, the import tax rate for vehicles with HS codes 8703.23.63 and 8703.23.57 will decrease from 64% to 32%, nearly equal to the tax rate committed under the CPTPP Agreement in 2025. For HS code 8703.24.51, the import tax rate will decrease from 45% to 32% to unify the tax rate among vehicles in the same segment.

The Ministry of Finance calculates: Reducing MFN import tax according to this plan is expected to reduce state budget revenue by about 8.81 million USD (calculated according to the import turnover subject to MFN tax in 2024).

However, this decrease could be offset if the volume of imported vehicles from MFN countries increases, replacing imported vehicles from ASEAN.

The Ministry of Finance is currently seeking opinions from agencies, organizations, businesses and experts on the draft Decree amending and supplementing preferential import tax rates (MFN) of a number of items in the preferential import tax schedule according to the list of taxable items issued with Decree 26/2023/ND-CP.

Once finalized, tax adjustments will be proposed before being submitted to the Government for approval. The Ministry of Finance expects that the Decree amending MFN import tax will be issued in March and take effect immediately.

Mr. Nguyen Quoc Hung, Director of the Department of Tax, Fee and Charge Policy Management and Supervision (Ministry of Finance) said that this adjustment of the MFN tax rate complies with important principles. First of all, it ensures compliance with the provisions of the Law on Export Tax and Import Tax.

The import tax adjustment will focus on domestically produced goods that are not yet produced or are produced but cannot meet consumption demand. For goods with large import turnover from important partners, there will be a thorough review to ensure reasonableness.

According to VNA/Vietnam+

Source: https://baogialai.com.vn/de-xuat-giam-manh-thue-nhap-khau-doi-voi-3-dong-oto-post316461.html