The
Ministry of Industry and Trade (MoIT) has recommended the Government choose a
6-9 seat multi-utility vehicle with cylinder capacity of less than 1.5 litres
as a priority for next year.
Last
month, MoIT and the Ministry of Finance met with representatives of domestic
and foreign joint-venture automobile manufacturers to gather their proposals on
which models would be suited for development beginning next year. However, the
attendees failed to come to a conclusion as all automobile manufacturers wanted
their car models to be chosen as the national strategic car line.
Tax
incentives
With
MoIT’s selection, the strategic vehicle, which meets Euro 2 standards on
exhaust fumes, will be a completely new vehicle in Viet Nam, and no
manufacturer can accuse MoIT of unequal treatment. Currently, factories from
Toyota, Ford, GM Deawoo and Mitsubishi are also manufacturing 6-9 seat
vehicles; however, their cylinder capacity exceeds 1.5 litres.
If MoIT’s
proposal is approved by the Prime Minister, the strategic vehicle line will
receive tax incentives to develop. MoIT has proposed to apply the lowest luxury
tax rate of 30 per cent on the selected vehicle over the rates of 45-60 per
cent imposed on other kinds of cars. The luxury tax rate will be also lowered
in accordance with the localisation ratio of the cars.
The
selected vehicle may also enjoy an ownership registration tax of 2 per cent
compared with 10-12 per cent on others. The value added tax (VAT) of the
selected car will also be pegged at 5 per cent compared with 10 per cent for
others.
The
manufacturers of the strategic car line and the manufacturers of supporting car
parts will enjoy either corporate income tax reductions or exemptions and zero
per cent tax on imported machines and equipment for production.
Explaining
criteria for the selection, MoIT said that the strategic line is required to
fit the taste, demand and financial capability of Vietnamese consumers. Six to
nine seat vehicles currently sell well in the country.
The car
line is believed to be attractive enough to encourage production and draw car
part manufacturers to Viet Nam, helping to raise the locally-made content
ratio.
Reasonable
prices are also necessary because cars will need to be competitive with foreign
autos bearing no tariffs by 2018. Domestic automobile manufacturers worry that
the import tariff on ASEAN cars will be lowered to 0-5 per cent in nine years
under the country’s commitments to the ASEAN Free Trade Area, a move which will
lead to an influx of foreign-made cars in Viet Nam.
With a
cylinder capacity of less than 1.5 litres, the vehicle will also be fuel
efficient, environmentally friendly, and economical. MoIT expects to make
public the strategic vehicle model late this year following Prime Ministerial
approval.
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