VietNamNet Bridge – The domestic car market witnessed spectacular development in 2015. Vietnamese people reportedly spent a record of nearly $3 billion on purchasing imported completely built cars (CBUs), an increase of 76 per cent in quantity and 87 per cent in value compared to 2014.

Also last year, car firms and consumers were sat on a rollercoaster of insecurity by policy drafts and forecasts related to taxes, fees, car prices, and car-related security activities. Below are the major policies approved and coming into force in the car industry in 2016.

Taxable price of imported cars to be revised upwards

According to the newly effective Decree No.108/2015/ND-CP giving guidance on the implementation of the amended law on special consumer tax (SCT), tax rates will be raised due to changes in the method of calculation.

In case importers sell CBUs via an agency model, the SCT rate will be evaluated as the agent’s selling price before commissions, potentially largely differing from the previously applicable wholesale price.

In case CBUs are subsequently sold by a trading entity, the SCT rate must not be less than 93 per cent of the entity’s average selling price, instead of the 90 per cent as previously regulated.

Along with these changes, the SCT rate will include the sum of importers’ profit, marketing, and logistics expenses, among others.

In reality, both sales agents and car manufacturers have announced their intentions to raise car prices. German-backed Mercedes-Benz Vietnam has introduced a new price set with specific increases to each car model. The lowest increase was reported at VND20 million ($9,200) and the ceiling was VND1.8 billion ($82,500), according to newswire VNExpress.

Lower import tariffs imposed on ASEAN cars

In light of the Ministry of Finance’s Circular 165 in 2014, importers of ASEAN products will be entitled to a special preferential tax scheme pursuant to the ASEAN Trade in Goods Agreement (ATIGA). Particularly, the import duty levied on CBUs from the ASEAN will be reduced to 40 per cent in 2016 from the previous 50 per cent. Similarly, this rate will slide further down to 30 per cent in 2017 and zero per cent in 2018.

Provision of automatic transmission car driver’s licenses

In light of the Ministry of Transport’s amended Circular 46, starting from January 1, 2016 the granting of driver’s licenses to automatic transmission cars will be carried out simultaneously with traditional manual transmission cars’ driver license provision.

Particularly, automatic transmission cars’ driver licenses (B1 category driver’s license) will be granted to non-professional drivers, to drive automatic transmission cars up to nine seats, trucks, including below 3.5 tonnage specialised trucks.

People acquiring B1 category driver licenses are allowed to drive manual transmission cars only.

When the draft policy was enacted last year, there was big public debate over the misunderstanding about the new type B1 driver licenses’ significance.  

As clarified since, people having B1 driver licenses are only allowed to drive manual transmission cars, while those having traditional manual transmission cars’ driver licenses can drive both automatic and manual transmission cars as well.

The understanding that both types of driver’s licenses are necessary to drive both types is totally inadequate.

The overall target of granting B1 driver licenses is to make it easier for people to drive cars, especially for women. This method is widely applied in developed countries like Germany, the US, Japan, and Australia.

Other policies:

Along with these major policies, this year car users need to brace themselves against a number of other regulations, such as reforms in auto auditing, control and treatment of overloaded trucks, etc.

Furthermore, changes to the SCT rate as well as other kinds of taxes and fees will be further considered for application this year by the competent government agencies.

VIR