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Vehicle prices set to rise on higher taxes
2012-0319
Vehicle prices could see a major surge next year when the government abolishes the set reference price on imports.
The Ministry of Finance has informed tax and customs officials nationwide that in 2013 the government will abolish the reference price used as the basis for calculating import tariff and excise tax, in preparation for joining the Asean Tree Trade Area (AFTA) in 2015.
Customs and tax officials are instead advised to set charges based on the invoice for imported goods, creating the possibility that the prices of vehicles and other imported goods will see a significant increase.
At present, vehicle importers pay import tariff and excise tax based on a reference price, which is much lower than the actual price of the vehicle. For example, the reference price of a pick-up truck is set at US$10,000, even though the invoice may show a price of US$20,000.
This means a person who imports a pick-up pays about US$8,000 in import tariff and excise tax, which is about 80 percent of its value. But an importer will pay about US$16,000 in tax if the government sets the tax based on the invoice.
If the government goes ahead with its plan to abolish the reference price, the resulting prices will be beyond the reach of Lao vehicle buyers, car dealers say.
Officials at the Ministry of Finance's Tax Department said the government would allow vehicle purchasers to pay the tax annually instead of as a lump sum at present, in order to make prices affordable.
The National Assembly recently approved a revised Tax Law, giving the green light for the Ministry of Finance to collect vehicle excise taxes from vehicle owners annually, instead of as a one-time upfront payment.
Policymakers say it is still unclear how the government will arrange for tax payments to be made annually, but say there are many ways that tax officials can collect the tax from vehicle owners.
One of these is for vehicle owners to pay the excise tax when they renew their vehicle licence each year. Some tax officials say they may involve village authorities in the work as they have information about who owns vehicles.
Other tax officials say the payments could be made through banks.
A number of car dealers have welcomed the switch to annual payments of excise tax, saying this means they won't have to pay so much tax when they import vehicles for sale.
They point out that people will have to pay less to own a car initially but will face higher tax payments the following year.
The Ministry of Finance has informed tax and customs officials nationwide that in 2013 the government will abolish the reference price used as the basis for calculating import tariff and excise tax, in preparation for joining the Asean Tree Trade Area (AFTA) in 2015.
Customs and tax officials are instead advised to set charges based on the invoice for imported goods, creating the possibility that the prices of vehicles and other imported goods will see a significant increase.
At present, vehicle importers pay import tariff and excise tax based on a reference price, which is much lower than the actual price of the vehicle. For example, the reference price of a pick-up truck is set at US$10,000, even though the invoice may show a price of US$20,000.
This means a person who imports a pick-up pays about US$8,000 in import tariff and excise tax, which is about 80 percent of its value. But an importer will pay about US$16,000 in tax if the government sets the tax based on the invoice.
If the government goes ahead with its plan to abolish the reference price, the resulting prices will be beyond the reach of Lao vehicle buyers, car dealers say.
Officials at the Ministry of Finance's Tax Department said the government would allow vehicle purchasers to pay the tax annually instead of as a lump sum at present, in order to make prices affordable.
The National Assembly recently approved a revised Tax Law, giving the green light for the Ministry of Finance to collect vehicle excise taxes from vehicle owners annually, instead of as a one-time upfront payment.
Policymakers say it is still unclear how the government will arrange for tax payments to be made annually, but say there are many ways that tax officials can collect the tax from vehicle owners.
One of these is for vehicle owners to pay the excise tax when they renew their vehicle licence each year. Some tax officials say they may involve village authorities in the work as they have information about who owns vehicles.
Other tax officials say the payments could be made through banks.
A number of car dealers have welcomed the switch to annual payments of excise tax, saying this means they won't have to pay so much tax when they import vehicles for sale.
They point out that people will have to pay less to own a car initially but will face higher tax payments the following year.
Source: Vietstock
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