Car imports rise sharply to evade tax

08.08.2016

As many as 12,000 cars were imported in July, increasing by 30 per cent as compared to the month before, the General Statistics Office (GSO) has reported.

The GSO said the number of imported cars rose but the value reduced to US$193 million from $248 million in June. On average, each car cost $16,000 in July, $11,000 lower than that in June.

The rapid increase originated from direct impacts of the Law on Special Consumption Tax, which was revised so that taxes would be raised for the vehicles with high engine displacement of more than 2,500cc from July 1. The tax level will be directly proportional to the volume of engine displacement, in which, the car of 6,000cc, the highest engine displacement, is taxed at 150 per cent from 60 per cent of its value.

Meanwhile, imported vehicles with nine seats or less – and engine displacement of 1,500cc or less, enjoyed a cut of between 40 per cent and 45 per cent.

That is why the number of imported cars in June was low but its value reached a record $248 million, while the number of imported cars in July was high but its total value was low at $193 million.

In seven months, Viet Nam imported 62,000 cars worth $1.4 billion, a year-on-year reduction of 3.9 per cent in quantity and 17.9 per cent in value, the GSO said.

Circular 20 should be eliminated

In another issue related to the current argument between auto businesses about the Circular 20’s regulations on auto imports, Minister-Chairman of the Government Office Mai Tien Dung said the government had assigned the Ministry of Industry and Trade to evaluate the circular and suggest suitable methods.

Basing on the report from the industry and trade ministry and ideas from relevant ministries, agencies, associations and businesses, Dung said Prime Minister Nguyen Xuan Phuc would consider and give guidance, which would be legal, meeting the demand of management, protecting the customers‘ rights and interests, as well as the operation of auto import businesses.

Earlier, several ministries and agencies said that the circular’s contents should be abrogated. According to the Ministry of Justice, the circular’s regulations have violated laws on Competition and Intellectual Property Rights.

Meanwhile, the General Department of Customs said the circular was not suitable with the Investment Law.

In a document sent to the Prime Minister this week, Chairman of Vietnam Chamber of Commerce and Industry (VCCI) Vu Tien Loc asked the Government to eliminate the circular.

Loc said there were no signals to prove that the circular helped to reduce the excess of imports over exports.

After the circular was issued in 2011, the number of imported cars reduced in 2011 and 2012, but it increased strongly from 2013 to 2015. About 55,000 cars worth $1.02 billion were imported in 2011, but in 2015, 125,000 cars worth $2.98 billion were imported.

The VCCI leader said the circular had obstructed the market accession of small and medium enterprises.

„The withdrawal of the circular will be also meaningful for the development of domestic private business community,“ Loc said. 

Source: VNS

Photo: CBR Investment AG