According to the draft of the preferential tariff schedule for cars imported from the EU in the 2021-2022 period, Vietnam will cut import tax from 7-8% per year, this reduction follows the roadmap to abolish this item tax in a 9-month period. next 10 years. The Ministry of Finance has just issued a draft Decree on the special preferential import schedule in the Free Trade Agreement between Vietnam and the European Union (EU) for the period of 2020 and 2022, according to which each year in the automotive sector Vietnam will remove the 7.1% import tax.
Specifically, in the tax schedule of cars, the Ministry of Finance stated that currently, cars imported from the EU under HS code have an average import tax rate of 66.6% to 70.9% depending on cylinder capacity. . For cars with cylinder capacity from 1,000 cc to 2,500 cc, the current import tax rate is 70.9%, which will be reduced to the tax rate of 63.8% in 2021 and 56.7% in 2022. For vehicles with a cylinder capacity of over 2,500 cc to 3,000 cc and from 3,000 cc or more, the current import tax rate of 70.2% will be reduced to 62.4% in 2021 and 54.6. % in 2022. Thus, it can be said that the tax rates that the Ministry of Finance offers for cars imported from Europe will decrease according to the corresponding route from 7.1% to 7.8% depending on the car capacity. . The higher the cylinder capacity, the faster the import tax reduction in Vietnam. Meanwhile, models with smaller cylinder capacity will receive tax reduction more slowly. It is known that this draft Decree has been consulted with ministries, branches and localities before submitting to the Government for signing and promulgation. It is expected that in a short time, the Decree will be issued to guide businesses and organizations to comply with the regulations on the tariff reduction roadmap. Thus, with the removal of from 7 to nearly 8% of the tax rate, European cars entering Vietnam can theoretically be reduced by the corresponding proportion. According to information from the Department of International Cooperation, the reduction of import tax for goods from the EU into Vietnam will have to comply with the provisions of the law and the binding commitments in the EVFTA. Therefore, the tariff reduction roadmap after 2022 will be soon developed and submitted to the Government for signing and promulgation. In the market, the removal of the tax rate from 70% is expected to be a boost for the imported car market in Vietnam. However, to reduce the actual price, it needs a lot of factors from businesses and the market. Suppose a car with a cylinder capacity of over 2,500 cc has a customs declaration price for importing into Vietnam of VND 2 billion (price does not include excise tax, VAT, and registration fee), with the tax rate import decrease from 7.8%/year, the theoretical car price will decrease by over 150 million dong/year, equivalent to about 300 million dong in 2022. If the roadmap to cut the average import tax rate from 7.1%-7.8%/year in the period 2021-2022 is applied for the next 9-10 years, high-volume vehicles of 2,500 cc or more will take 9 years to return to 0% import tax; Meanwhile, cars from under 2,500 cc or less will take 9 years and 9 months to drop the tax to 0%. Currently, in addition to import tax, European car models will be subject to excise tax (35% to 150% depending on vehicle size), value added tax (10%), registration fee (10- 12% depending on the locality), corporate income tax (22%), registration fee… are included in the car price when registering the car for the first time (the rolling price). Most European cars have a high cylinder capacity of over 2,000 cc or more, so in addition to a large import tax rate, these models are also subject to an excise tax of over 40%, which makes the price more expensive. Cars imported from Europe in Vietnam are always much higher than Japanese and Korean cars imported from other markets.