VietNamNet Bridge - Car importers have unanimously opposed the Ministry of Finance’s (MOF) plan to apply a new luxury tax method.

 

Eight authorized car dealers in Vietnam have lodged a petition to relevant ministries complaining about the new taxation method mentioned in the draft luxury tax law which is expected to take effect on January 1, 2016.

A dealer said that a car sold for $50,000 last year now sells for $52,000-$55,000 if referring to the current Decree No 108. The decree stipulates that the taxable prices are the selling prices set by enterprises which must not be lower than 105 percent of the import cost prices.

Meanwhile, if applying the calculation method mentioned in the draft law, the price would be $55,000-$60,000.

The dealer complained he doesn’t know which calculation method he should apply. 

“If we apply the current regulation, or Decree No 108, tax inspectors will force us to pay additional tax, and it is impossible to ask car buyers to pay more. If we apply the new rule, we will have to wait for guidance from state management agencies,” he said.

As such, car dealers have fallen into a dilemma. They dare not sell cars now, while they cannot set the selling prices for contracts to be signed from January 1, 2016.

A lawyer noted that the regular changes in taxation policies could confuse enterprises. This is the second time MOF has changed the way of calculating tax. Prior to that, a new tax calculation was stipulated in the Decree No 108 which just took effect in October 2015.

After the decree was released, enterprises sent a dispatch to management agencies asking to issue the legal document guiding the implementation of the decree soon to ensure their uninterrupted business. However, they have not received any reply, and another new tax calculation method is released.

Car dealers not only fear that prices would escalate, but also feel inconvenient because they would have to pay tax twice.

Under the old regulations, importers have to pay tax one time when they get imports cleared at ports. But under the draft law, they would have make tax payments twice, when getting imports cleared and when selling cars.

Official reports showed a sharp increase of 85.5 percent of car imports in the first nine months of the year in comparison with last year. 

Analysts noted that the sharp increase was not caused by higher demand but people rushing to buy cars before the time the new tax calculation method is applied.

NLD