VietNamNet Bridge – The Ministry of Finance (MoF) has rejected measures proposed by the Viet Nam Automobile Manufacturers Association (VAMA) to reduce vehicle taxes in order to help auto makers overcome their current difficulties.

Cars at Thu Thiem tunnel toll booth in HCM city. The Finance Ministry has rejected measures proposed by VAMA to reduce vehicle taxes.

In a letter submitted to the MoF, VAMA suggested that the ministry reduce special consumption tax (SCT) and halt the imposing of any further fees on vehicles.

The MoF replied by saying that SCT belongs to the tax law and any adjustment falls under the National Assembly's (NA) jurisdiction. The NA made no mention of the issue at their last meeting.

Regarding other fees imposed on vehicles, the ministry declared that no new fees had been applied recently and any move to do so would first have to be reviewed by a number of ministries.

Answering VAMA's proposals about strengthening car import regulations by reviewing Circular 20, which restricts vehicle trading, the MoF said that this is the responsibility of the Ministry of Industry and Trade (MoIT).

However, both the trade and finance ministries have been considering removing Circular 20 to allow more car importers and dealers to join the market while boosting supplies of imported cars with a wider variety of brands.

Government refuels ailing

Automobile sales in Viet Nam fell by a record 37 per cent in 2012, with VAMA claiming the plunge could be attributed to the economic recession.

Vehicle sales for the 12 months of 2012 totalled just 93,000 units, according to the association which represents the country's 18 car makers.

The association said the decline was worsened by the series of fees and taxes introduced which have dissuaded potential buyers from making a purchase.

The Government recently issued a resolution to help struggling businesses and stimulate the slowing economy by cushioning the blow of planned motoring fees.

The 02/NQ-CP resolution will reduce the new car registration fee to 10 per cent of its total value and 2 per cent for second hand cars across the country.

Meanwhile, it will cancel the implementation of car ownership fees which would have seen each car owner pay VND20-50 million per year, in an attempt to restrict rising car numbers responsible for chronic traffic congestion.

In March, VAMA asked the Government to postpone the implementation of a series of car fees initiated by the Ministry of Industry and Trade, saying the Government should first build a policy to develop and diversify the transportation network.

If the proposed fees are applied, they say it will be impossible to achieve the Government's auto development plan by 2020, which is regarded as a pillar of the country's economy.

In that case, Viet Nam will have to spend approximately US$12 billion per year on car imports, which will negatively affect the trade balance.

Source: VNS