While management agencies argue, businesses suffer

While the Ministry of Finance affirms that Kia Morning and Daewoo Matiz cars imported by 36 enterprises are passenger cars, the Ministry of Transport, Ministry of Science and Technology, the Vietnam Chamber of Commerce, and Ministry of Industry believe that these automobiles are vans.

It is very important to determine whether these imported vehicles are vans or passenger cars, because this will determine the level of import tax buyers will have to pay. Passenger cars are subject to a much higher tax.

Passenger cars are liable to three taxes: a preferential import tariff on 83 percent on brand new imports (or a flat fee of $3,500 on used imports); a luxury tax of 45 percent, and a value-added tax (VAT) of five percent.
‘Vans,’ on the other hand, are subject to a tariff of 60 percent and are exempt from the luxury tax and the VAT.

The Ministry of Finance (MOF) believes that the 550 imported vehicles are passenger cars and has decided to collect 34 billion dong in tax arrears from the 36 companies that imported cars in 2009.

In early August 2010, MOF sent a dispatch to the Vietnam Chamber of Commerce and Industry (VCCI), requesting the chamber, as the representative of the business community, to support the Ministry in its decision to collect tax arrears from the vehicle importers.

According to VnExpress newspaper, in the document sent to VCCI, MOF wrote that it had consulted with the many other relevant branches of government and automobile manufacturers before making the conclusion that the imported vehicles are passenger cars, not vans as declared by importers.
MOF thinks that the importers deliberately declared the imported vehicles as vans in order to pay the lower tariff rate. “MOF has reported the case to the Government, and the Prime Minister has instructed them to collect tax arrears from the importers. The tax rate is the rate applied to passenger cars,” the document reads.

However, VCCI does not agree with MOF. In reply, the chamber has sent a document to MOF, clearly expressing its view that the vehicles are vans, not passenger cars.

The Ministry of Transport and the Ministry of Science and Technology had both previously certified that the imported cars are vans.

The view that the cars are indeed vans was once again re-affirmed by the representatives of the two ministries at a meeting held on July 20, 2010, where the relevant ministries gathered to discuss taxation rates on imported vehicles.

Document No. 2296 of the General Department of Customs, promulgated on April 25, 2007, clearly stipulates that customs agencies apply suitable import policies and apply suitable import tariffs after considering the Ministry of Transport’s conclusions.

The Ministry of Transport decided that the imported vehicles are vans, therefore, the imports must bear the tariffs imposed on vans, representatives from VCCI argued at the meeting.

Also at the meeting, relevant departments of the Ministry of Transport all affirmed that if referring to the national standards TCVN 7271:2003, the imported Kia Morning and Daewoo Matiz must be recognized as vans. The representative from the Ministry of Science and Technology also affirmed that the imported vehicles met the requirements to be recognized as vans.

VCCI said that the General Department of Customs needs to respect the national standards TCVN 7271:2003, which is still valid. VCCI also urged the General Department of Customs to create more favorable conditions for enterprises to do business.