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Ministries at odds over tax reduction for trucks
The
tentative scheme to lower import tariffs on trucks has made a rift between the
Ministry of Industry and Trade and the Ministry of Finance, with the former saying
the time has not come while the latter upholding the view.
The
Ministry of Finance has earlier disseminated a draft for feedback, suggesting
sharp tax reduction for trucks of different categories. The draft was sent to
the Vietnam Association of Automobile Manufactures and the ministries of
Industry and Trade, Planning and Investment, and Transport.
According
to the plan, tariffs would be cut from 80% to 30% for 5-tons trucks, from 55%
to 25% for 5- to 10-ton trucks, from 30% to 25% for 10- to 20-ton trucks and
from 15% to 8% for 20- to 45-ton trucks.
The
Finance Ministry reasoned that a truck is a corporate vehicle for transport,
and the current tax applied for a 10-ton van is too high. Meanwhile, this kind
of vehicle is mostly assembled domestically, not manufactured, with main parts
being imported.
Even with
the tax adjustment, the difference is still 10 to 15 percentage points compared
with tariffs on components and accessories, so the lower tax rates should not
adversely affect local manufacturing, according to the ministry.
But the
Ministry of Industry and Trade bluntly rejected the plan.
In a
newly-issued document, the Ministry of Industry and Trade said such a
tax-reduction scheme was earlier than commitments
According
to this ministry, the import tax on an under-five-ton van in 2011 should be 70%
while it should be 50% for a 5- to 10-ton truck and 30% for a 10- to 20-ton
truck. Any further adjustments later will be considered depending on local
manufacturing and market conditions, the ministry said.
The
Ministry of Industry and Trade suggested the Finance Ministry cut the tariffs
from 80% to 70% for 5-ton trucks, from 55% to 50% for 5- to 10-ton trucks, and
continue the current rate of 30% for 10- to 20-ton trucks. These rates should
be applied from the end of 2011 and reviewed and adjusted from 2012 based on
the development of the domestic market as well as the capacity of local
companies.
In the
same chorus, local auto manufacturers and experts said the plan to reduce
import taxes on trucks proposed by the Ministry of Finance could harm the
domestic automobile industry.
Tran Ba
Duong, general director of Truong Hai Auto Joint Stock Corporation, said the
proposed tax cut would be too hasty and far earlier than the deadline of 2018,
as provided for in the nation’s commitments to the World Trade Organization.
Duong added that enterprises would not be able to make timely plans to deal
with the impacts of a tax reduction scheme of such an extent.
Besides
three factories for assembling trucks, buses and passenger cars and five
factories for manufacturing auto components, Truong Hai is inviting foreign and
local investors to invest into
Meanwhile,
Bui Ngoc Huyen, general director of the Xuan Kien Automobile Joint Stock
Company, or Vinaxuki, told local media that the proposed low tariffs, to be
implemented without giving time for preparations, would not help develop the
domestic auto industry, and might lead to the shutdown of factories.
His
company began assembling autos in 2004 and had since poured VND1 trillion into
production, said Huyen. The company expects its autos to be made with 50%
locally produced parts by 2012.
“The
company’s localization rate for assembled trucks will also rise from 15% to
50%,” he said. “But the proposal to cut import tax for trucks would have a
negative impact on our investment in production of truck components as well as
adversely affect the auto industry’s development strategy.”
