MOF has outlined an amendment of the luxury tax law and plans to list environmentally friendly vehicles as one of the products subject to adjustment in terms of goods description and tax rates. 

This is good news for consumers, electronic and hybrid vehicle manufacturers doing business in Vietnam. 

The ministry intends to set lower luxury tax rates for purely electric and hybrid vehicles. The specific tax rates will be calculated once the amendment of the law gets approval and will be shown in the draft of the law.

In early 2022, the luxury tax rates for battery-run electric cars saw sharp decreases. 

Under Law No03/2022/QH15 on amending nine laws ratified by the National Assembly on Jan 11, 2022, from March 1, 2022 to February 28, 2027, battery-run electric cars with under 9 seats enjoy a luxury tax rate of 3 percent instead of 15 percent, while 10-16-seat cars and pickups have a 2 percent rate instead of 10 percent, and 16-24-seat cars 1 percent instead of 5 percent.

From March 1, 2027, the luxury tax rates will increase from 3 percent to 11 percent, from 2 percent to 7 percent and 1 percent to 4 percent, respectively.

As for other passenger electric vehicles, from March 1, 2022, cars with 9 or fewer seats are taxed 15 percent, cars with 10 or under 16 seats and pickups are 10 percent, and cars with 16 or fewer than 24 seats 5 percent.

As for hybrids, the current laws only give general regulations: “Cars running with petrol together with electricity and biological energy, of which the volume of petrol used doesn’t exceed 70 percent of total energy used”, have luxury tax rates that are equal to 70 percent of the tax rates applied to petrol-run vehicles of the same kinds.

Meanwhile, there has been no guidance on defining proportion of petrol in total energy volume used. As a result, HEV (hybrid electric vehicles) and PHEV (plug-in hybrid electric vehicle) still bear the same luxury tax rates as petrol-run vehicles (35 percent at minimum applied to the cars with cylinder capacity of below 1.5 liters, and 150 percent at maximum for over 6.0 liters).

According to MOF, the amended law will stipulate that petrol-electricity run cars are plug-in hybrids. 

There are many electric and hybrid vehicle models available in Vietnam. VinFast, the Vietnamese manufacturer, has launched VF e34, VF8 and it is going to launch VF6, VF7 and VF9.

Hoang Hiep