Continue to reduce 50% of automobile registration fee and extend excise tax payment deadline for automobiles manufactured and assembled in Vietnam?
Proposing to continue reducing automobile registration fees by 50%?
Recently, the Ministry of Industry and Trade of Vietnam issued Official Dispatch No. 2464/BCT-CN in 2023 implementing Resolution No. 31/NQ-CP in 2023.
According to that, the Official Dispatch stated that in the years 2020 and 2022, before the decline of the auto market due to the impact of the COVID-19 pandemic, at the request of the Ministry of Finance, the Government has applied a policy of reducing 50 % of the VAT rate for automobiles manufactured and assembled in Vietnam through the issuance of Decree No. 70/2020/ND-CP (effective from June 28, 2020 to the end of December 31, 2020) and Decree No. 103/2021/ND-CP (effective from December 1, 2021 to the end of May 31, 2022).
The above policies, which were issued in a timely manner, have brought positive effects, helping automobile manufacturing and assembling enterprises to restore production, gradually expand the scale of investment, and localize products in order to promote the development of supporting industries, thereby promoting economic development, creating jobs, and contributing to ensuring social security in the context of general difficulties caused by the pandemic.
However, entering the beginning of 2023, while enterprises have not yet fully recovered from the pandemic, the growing risk of an economic recession is causing serious impacts on automobile manufacturing and assembling enterprises in particular and the whole economy in general when facing many difficulties and challenges coming from both domestic and foreign factors. In addition, the pressure of inflation, exchange rate, interest rate increases... affects consumer psychology, leading to a tendency to tighten spending on high-value items.
At the same time, based on the reality of the auto market in the last months of 2022 and early 2023, sales of the entire automobile market in the first three months of 2023 (including passenger automobiles and commercial vehicles) decreased significantly.
According to the sales report of the Vietnam Automobile Manufacturers Association (VAMA), Hyundai Thanh Cong and Vinfast, sales in January 2023 of the whole market reached 17,852 vehicles, down 60% compared to December 2022 and down 54% over the same period in 2022; sales in February 2023 of the whole market reached 26,419 vehicles, up 48% compared to January 2023 and equal to the same period in 2022.
Although sales in March 2023 of the whole market reached 32,819 vehicles, up 24% compared to February 2023 but down 28% compared to the same period in 2022.
Generally, in the first three months of 2023, sales of the whole market reached 77,090 vehicles, down 31% compared to the same period in 2022.
Therefore, in order to continue implementing the Socio-Economic Development and Recovery Program (implementation time until the end of 2023 according to the Government's Resolution No. 11/NQ-CP in 2022), the continued application of a policy to support the reduction of registration fees for domestically manufactured and assembled automobiles in an appropriate period of time is necessary and consistent with the general spirit, contributing to stimulating consumer demand for domestically manufactured and assembled automobiles, supporting automobile manufacturing and assembling enterprises and distributors to consume inventory of automobiles due to the difficult economic situation, increasing revenue, offset costs, contribute to helping the domestic automobile manufacturing and assembling industry soon overcome the crisis and develop.
It is possible to consider the time to apply this policy until the end of 2023 (when the global economy is expected to have positive signs).
Besides, during the time of applying the policy of reducing the registration fee rate according to Decree No. 70/2020/ND-CP and Decree No. 103/2021/ND-CP, we have not received any comments or objections from WTO members as well as trading partners in the frameworks to which we participate.
Continue to reduce 50% of automobile registration fee and extend excise tax payment deadline for automobiles manufactured and assembled in Vietnam?
Need to study the policy of extending the excise tax payment deadline for automobiles manufactured and assembled in Vietnam?
This is also one of the important issues recorded in Official Dispatch No. 2464/BCT-CN in 2023. According to that, the Ministry of Industry and Trade of Vietnam has the opinion that according to the provisions of Article 63 of the 2019 Law on Tax Administration of Vietnam as follows:
The Government shall decide tax deferral for entities or business lines facing special difficulties in specific periods of time. Tax deferral must not lead to changes to the estimated state budget revenues decided by the National Assembly.
Thus, the Ministry of Industry and Trade of Vietnam supports the proposal of the Ministry of Finance on the plan to extend the excise tax payment deadline for automobiles manufactured and assembled in Vietnam according to Article 63 of the 2019 Law on Tax Administration of Vietnam.
However, it is proposed that the Ministry of Finance study and supplement the plan to extend excise tax payment deadline for October 2023 (the deadline for paying excise tax payable arising of the October 2023 tax period is December 20 at the latest. /2023) to support enterprises (in Official Dispatch 2914/BTC-CST in 2023, the Ministry of Finance only proposed an extension for the months of June, July, August, and September of 2023).
Proposing preferential policies so that people can buy automobiles at a cheaper price?
In Section III of Official Dispatch No. 1154/BCT-CN in 2023, the Ministry of Industry and Trade of Vietnam has made preferential recommendations to support the development of the automobile industry, specifically as follows:
According to Resolution No. 29-NQ/TW in 2022 of the 13th Party Central Committee on continuing to promote industrialization and modernization of the country until 2030, with a vision to 2045, one of the specific goals by 2030 is "To form a number of large-scale, multinational, domestic industrial corporations and enterprises with international competitiveness in fundamental industries, priority industries, spearhead industries, etc.” and automobile manufacturing is one of the spearhead industries that are focused on development.
In addition, the Strategy for the Development of Vietnam's automobile industry to 2025, with a vision to 2035, has set the orientation "...to encourage investment in projects large enough to create a market for the supporting industry.".
With the above orientations, the Ministry of Industry and Trade of Vietnam proposes preferential and supportive policies to promote the development of the automobile industry based on the following criteria:
- Ensure compliance with the Party's orientation on accelerating industrialization and modernization and the development strategy of Vietnam's automobile industry to 2025, with a vision to 2035 in the direction of incentives and support for automobile manufacturing and assembling enterprises with potential, with large enough output, methodical and long-term investment for long-term production and business activities in Vietnam in order to create a market for supporting industries and contribute to lower automobile selling price...;
- Consumers can access automobiles at a cheaper price;
- Based on the experience of some countries in the region, there are policies to attract large-scale automobile production and assembly projects such as Thailand, Indonesia, and the Philippines.
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