Some of tax incentives to support the auto industry
In order to promote the automobile industry to develop stronger, especially in the context of the COVID-19 epidemic causing serious and heavy impacts, the Ministry of Finance has actively advised and submitted proposals to the Government to issue several tax incentives to promptly take measures to support businesses operating in the industry.
Recently, the Ministry of Finance has issued an Official Letter No. 4525/BTC-CST dated May 5, 2021, to answer the Vietnam Automobile Manufacturers Association (VAMA) about policy recommendations to supplement the support for businesses in the industry that are facing difficulties due to the impact of COVID-19.
According to the Ministry of Finance, over time, to degrade difficulties for businesses, organizations, households and business individuals, including those in the automobile manufacturing and assembling industries impacted by the COVID-19 pandemic, The Ministry of Finance has actively advised and submitted to the Government for promulgation a number of decrees.
These documents included: Decree No. 41/2020/ND-CP on extending the deadline for tax payment and land rent; Decree No. 70/2020/ND-CP, Decree 52/2021/ND-CP on extending the deadline for payment of value added tax, corporate income tax, personal income tax and land rent in 2021, Decree 70/2020/ND-CP on reducing 50% of the registration fee for domestically manufactured and assembled cars by the end of December 31, 2020, and Decree No. 109/2020/ND-CP on extending the deadline for paying excise tax on locally assembled or manufactured automobiles.
It is reasonable in the context that the special preferential import tax rate under the ASEAN Trade in Goods Agreement (ATIGA) for automobiles was reduced to 0% from January 1, 2018. Therefore, in order to contribute to the development of the domestic automobile industry, in Decree No. 125/2017/ND-CP amending and supplementing a number of articles of Decree No. 122/2016/ND-CP of the Government (on export tariff), preferential import tariff, list of goods and mixed tax rates, absolute tax, import tax outside the tariff quotas added tax incentive program for manufacturing and assembling automobiles from November 16, 2017, to December 31, 2022.
At the same time, in order to continue the goal of promoting the development of Vietnam’s automobile industry in accordance with the new context of the market as well as the epidemic, some contents of the tax incentive program for manufacturing and automobile assembly mentioned above under Decree No. 57/2020/ND-CP amending and supplementing Decree No. 122/2016/ND-CP and Decree No. 125/2017/ND-CP of the Government has been added. Accordingly, Decree 57/2020/ND-CP has added some sort of cars (such as electric cars, cars using fuel cells, hybrid cars, cars using biofuels, and cars using natural gas) to category that allowed to apply incentives of the program to promote the development of environmentally-friendly vehicles.
In addition, Decree No. 57/2020/ND-CP has amended a number of regulations and requirements related to vehicle models, procedures as well as program implementation documents, aiming to reduce administrative procedures ; amending some criteria of the minimum general yields of vehicle groups and the minimum specific yields of vehicle models to match the current situation of the automobile manufacturing and assembling industry in general, in the context of the COVID-19 as well as to be consistent with the industry development strategy and planning (taking into account future forecast factors).
The Ministry of Finance also informed that, in the near future, the Ministry would also update data, production situation of domestic automobile manufacturers and assemblers, developments and impacts of the COVID-19 pandemic, and coordinate with relevant ministries and branches to research, advise and report to competent authorities on new and appropriate policies to promote the development of the domestic automobile industry.
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