The Ministry of Finance proposes 2 options to reduce registration fees for domestically manufactured and assembled cars

DNHN - The Ministry of Finance has just issued Document No. 4295/BTC-CST on the implementation of Resolution No. 31/NQ-CP at the Regular Government Meeting in February 2023

The Ministry of Finance shall present the Prime Minister with two cases. As proposed by the People's Committees of Quang Nam and Ninh Binh provinces, the Vietnam Association of Mechanical Enterprises, and the Association of Manufacturers, the proposed 50% reduction in the fuel consumption tax rate for domestically manufactured and assembled cars has not been implemented. Vietnamese cars.

In the second scenario, if the Prime Minister decides to implement the policy of reducing the LP tax rate for domestically manufactured and assembled automobiles, it is proposed that one of two alternatives be considered. Option 1 is to reduce the fuel consumption tax rate by 50 percent for domestically manufactured and assembled automobiles; Option 2 is to reduce the fuel consumption tax rate by 50 percent for both domestically manufactured and assembled automobiles and imported automobiles.

According to the Ministry of Finance, the implementation of the reduction plan for domestically manufactured and assembled automobiles will stimulate consumer demand for domestically manufactured and assembled automobiles and support manufacturers and assemblers. Domestic automobile assemblers and distributors can consume the inventory of cars, contributing to the alleviation of difficulties for domestic automobile manufacturers and assembling enterprises in the face of a still challenging economic climate, thereby encouraging individuals and businesses to purchase domestically produced and assembled automobiles for their consumption and business needs.

However, it has not yet complied with the provisions of Vietnam's National Treatment principle within the WTO framework, FTAs, and the risk of importer and international organization reactions and complaints. It is possible to reduce state budget revenues by between VND 8,000 and VND 9,000 billion (implemented in the first six months of 2022, the revenue reduction due to policy adjustments will be VND 8,727 billion).

As for the proposal to reduce the rate of value-added tax (VAT) by 50 percent for both domestically manufactured and assembled automobiles and imported automobiles, the advantages of implementing this proposal will stimulate consumer demand, thereby benefiting individuals and businesses. Purchasing automobiles to meet consumption, production, and business needs; simultaneously ensuring the implementation of international commitments signed by Vietnam.

However, in the document submitted to the Prime Minister, the Ministry of Finance stated that it has not yet implemented a 50% reduction in the registration fee for domestic automobiles. Additionally, the Ministry provided the Prime Minister with two options from which to choose.

The Ministry of Finance proposes to consider one of two options if the Prime Minister decides to implement the policy of reducing registration fee rates for domestically manufactured and assembled automobiles.

- Option 1: Reduce by fifty percent the registration fee for domestically manufactured and assembled vehicles. This option has the potential to reduce State budget revenues by between VND 8,000 and VND 9,000 billion (implemented in the first six months of 2022, the revenue reduction due to policy adjustments is VND 8,727 billion).

Option 2: Decrease the vehicle registration fee by 50 percent for both domestically manufactured and assembled vehicles and imported vehicles. This proposal lowers State budget revenues.

Statistics indicate that car registration fee collection accounts for approximately 70% of total registration fee collection (total car registration fee collection in 2021 is projected to reach VND 27,318 billion, or 72% of total registration fee collection). Registration fee collection in 2022 is projected to reach 32,398 billion VND (representing 68% of total registration fee collection).

Consequently, if this option is implemented, the total registration fee collection for automobiles will decrease by approximately VND 15,000 to 16,000 billion, thereby affecting the state budget revenue in 2023 and the budgetary balance of certain difficult localities.

"Should the Prime Minister decide to reduce the fuel consumption tax rate for domestically manufactured and assembled automobiles by one of the two aforementioned options, it is proposed to (i) Assign the Ministry of Finance primary responsibility and coordination with other agencies. Relevant agencies shall develop a Decree to reduce the LP tax rate for domestically manufactured and assembled automobiles in 2023 by simplified order and procedures; (ii) Assign the Ministry of Industry and Trade to assume the prime responsibility for, and coordinate with relevant agencies in, developing response plans in the event of being sued for violations of international commitments" - Ministry of Finance stated in the document submitted to the Gov.

PV