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Automobile firms struggle with latest changes to Vietnam’s tax policy

By Bui Hong Nhung   April 27, 2016 | 04:27 pm GMT+7
Automobile firms struggle with latest changes to Vietnam’s tax policy

Car enterprises are complaining that constant changes to tax policies is affecting their business and cutting their contributions to the state budget as a result.

On January 1, the Ministry of Finance applied a new formula for luxury taxes imposed on cars following Decree 108. The tax is calculated based on a car’s wholesale price, which is at least five percent higher than its cost price (including import price, import tax and luxury tax), Vietnam News Agency reports.  

From July 1, a new formula will replace the old one, as approved by the National Assembly in April. However, many car traders said that the formula is not clear enough for them to calculate the luxury tax rate while the deadline is fast approaching.

Ten car distributors of luxury brands in Vietnam including Audi, Bentley and Lamborghini have sent a proposal to the Prime Minister as well as related authorities asking to keep the current formula while the new one is being clarified.

The distributors said that it is only two months until it takes effect, but they have not received any instructions about how to apply the new formula. As a consequence, they have been unable to offer accurate prices to potential customers.

“The current formula to calculate luxury duty on cars went into effect on January 1, but we weren't able to make our tax declaration until the end of March due to slow updates on the online declaration system. We don’t want to face that problem again,” they added.

The ten car distributors said the Ministry of Finance should provide detailed instructions and hold a public meeting with car traders before applying the new formula for luxury duties on cars.