Automakers spared trillions of dong in tax

Automakers in the country certainly have a sigh of huge relief after the Ministry of Finance in a new decision spared them of trillions of Vietnam dong in payable tax owing to the recalculation of tax rates for auto components.

Honda Vietnam and Ford Vietnam do not have to pay the amounts of VND3.34 trillion and VND32.5 billion for import tax respectively as earlier proposed by customs offices, according to Ministry of Finance’s guiding document.

Other automakers escaping the crippling tax sums include Vinamotor, Toyota Vietnam, and GM Daewoo.

The document states that automakers importing incompletely-knocked-down auto parts will still enjoy the preferential rate of under 27% if the value of each set of components is below 10% of the total value of all components for assembling a vehicle.

Under current regulations, IKD components are subject to the high tax slapped on completely-built-up vehicles, meaning in the range of 72% to 83%.

For auto parts imported from mid-April in 2006 until the end of 2010, the total value of incompletely-knocked-down parts must not exceed 10% of the total parts’ value.

The total value of incompletely-knocked-down auto parts imported since the beginning of this year must not be higher than 10% of the total value of parts needed to assemble a vehicle.

If auto parts do not meet the above criteria, the customs departments will classify and put the tax rate of completely built-up vehicles.

Previously, the Ministry of Finance had sent a document about local auto firms to the Government, saying that imported auto parts of five firms did not meet the completely-knocked-down level as required by the Ministry of Science and Technology to enjoy preferential tax rates. The new document on sparing tax sums for automakers was issued following instructions from Deputy Prime Minister Hoang Trung Hai.