Car taxes cut from January 1

The Ministry of Finance yesterday issued a new tariff on vehicle imports with tax cuts spelling benefits for car buyers from January 1.

Under the new tariff regime, the import tax on vehicles with less than nine seats and having a cylinder of 1.8–2.5 litres will be shaved 1 percentage point to 82 per cent. But cars with a cylinder of more than 2.5 litres will see a more substantial rate cut of 6 percentage points to 77 per cent.

The new rate for four-wheel drives will be 5 points lower at 72 per cent.

The ministry said they had made the adjustments to gradually meet Viet Nam's commitments to the World Trade Organisation (WTO) and ASEAN.

According to WTO commitments, vehicles will attract a tax rate of 83 per cent next year while the rate committed to ASEAN is 70 per cent.

Industry insiders said though the import tax cut was marginal, it became significant when other taxes including special consumption tax and value added tax, which will be also affected by the import tax, were taken into account.

Nguyen Van Long, a showroom salesman, estimated that vehicles with a cylinder size less than 2.0 litres would enjoy a reduction of roughly 0.8 per cent against the current price under the new tax rate. The reductions for vehicles with cylinders of 2.0–3.0 litres would be 0.9 per cent. For cars with cylinders of 3.0 litres or more, the savings would be roughly 4.4 per cent.

Long said that a Toyota Yaris would enjoy a reduction of roughly US$126.60 while the figure for a Toyota Camry would be $345.60. Buyers of Venza, Lexus and Accura brands, whose cylinders are more than 3.0 litres, would see reductions of roughly $1,019, $2,270 and $3,000 per unit.

Most consumers would now wait for next year to purchase cars, Long added.