Higher taxable prices to lift cost of imported cars

Auto importers said they may have to raise retail prices as the General Customs Department has set higher minimum taxable prices for hundreds of imported car models.

Taxable prices for all imported cars, both new and used, have been set between 2 and 20 percent higher than the end of last year, which can translate to an increase of up to thousands of US dollars. Any car priced under the minimum taxable amount is charged taxes based on the minimum.

The price list has been changed twice since October 2009.

The minimum taxable price on the Hyundai Genesis Coupe, for example, has been raised to US$15,600 from $14,000 last year.

Meanwhile, an Acura MDX Sport imported from Canada was priced at $35,000 at local ports last year. Now customs will tax the cars no less than $40,000.

Nguyen Van Can, deputy director of the General Customs Department, said the new reference price list would be applied flexibly for taxing purposes.

“Adjustments to taxable prices have been made in accordance with international conventions,” he said.

“It’s not a protectionist move in favor of the local auto industry or any local products.”

The Vietnam Automobile Manufacturers’ Association last year informed the Finance Ministry that some importers intentionally make invoice prices much lower than actual selling prices to reduce their tax obligations.

Pham Anh Tuan, secretary of the Vietnam Automobile Manufacturers’ Association, said the new higher taxable prices would make the car market healthier, preventing under-invoicing and other unfair practices by auto importers.

Price hike pressure

Nguyen Minh Phu, deputy sales manager at Hyundai Thanh Cong, the local distributor of Hyundai cars in Vietnam, said as a large importer his company is often offered better prices from the South Korean manufacturer.

“When our import prices are lower than reference prices, we will provide all contracts and invoices required by customs,” he said.

But other car importers do not think they can convince customs agencies that they actually pay less than the prices set in the new list.

A dealership owner on Le Duan Street in Hanoi said the new taxable prices, combined with the recent devaluation of the dong, would have an upward pressure on retail prices of imported cars.

“Price hikes will be inevitable. And more expensive imported cars will create even more advantages for locally produced cars.”

But Tuan said it’s unlikely for prices to surge anytime soon as many companies still have a large number of cars stockpiled.

“The local auto market is sluggish as banks have tightened loans. Moreover, many people already bought cars last year to benefit from tax cuts.

“Car prices depend on whether the market is hot or cold. It’s lucky if car sales can increase at the end of this year.

“Even if car importers have to pay higher taxes, chances are low that they will raise prices because it will dampen sales.”

The Ministry of Industry and Trade has recently announced plans to tighten control over car imports by setting stricter regulations.

The import of new cars with less than 16 seats accounted for a large part in the country’s trade deficit and this need to be restricted, the ministry said.

Vietnam’s car imports reached 80,600 units last year, with cars of less than nine seats accounting for more than 58 percent of the total figure.