MOF determines to tax cars with diplomatic number plates

How to deal with the cases, where people exploit the preferences offered to diplomatic agencies to evade tax, is now a big headache to the Ministry of Finance.

It is estimated that there are about 1200 cars, which were once the cars of diplomatic agencies, bearing diplomatic number plates, but have become normal cars. The cars have not been taxed, because there has been no regulation on the taxation on the cars after the cars are transferred in Vietnam.

The Ministry of Finance believes that it is necessary to collect tax from the cars, which still bear diplomatic number plates, but are not the cars of diplomatic agencies any longer. However, it asserts that ministries cannot solve the problem, while it will need a Prime Minister’s decision.

A “sensitive issue”

Customs agencies have found that in the time from 1998, to the end of August 2009, 4366 cars which belonged to diplomatic agencies were imported. Of these, 230 cars have been re-exported, and 1758 cars have been transferred or ruined. Of the other 2378 cars, 1158 cars have been “going adrift”, which means there has been no further information about the cars. They have not been transferred, or have been transferred already, but the involved parties have not paid tax.

It is expected that the tax sum that taxation bodies need to collect from the cars would be nearly one trillion dong. However, government agencies have admitted that this is a “sensitive” issue which is not easy to be dealt with.

Under the current regulations, the 1158 cars will have to pay tax arrears and pay fines. The tax payers must be the diplomatic individuals who have finished their working terms in Vietnam, or representatives of diplomatic agencies, general consulates and representatives of international organizations in Vietnam (the sellers).

However, it is not easy to find the tax payers now, because many diplomatic officers have left Vietnam after finishing the working terms. Meanwhile, diplomatic agencies can enjoy preferences and exemptions.

In the draft report which the Ministry of Finance is compiling and going to submit to the Prime Minister, the ministry said that the tax policy and the current import tax rates do not encourage people to follow necessary procedures when transferring the ownership. Especially, there has been no regulation on calculating tax, paying tax and collecting tax when the assets’ owners transfer the cars in Vietnam. Meanwhile, legal documents do not clearly stipulate how to punish the violators.

What do do?

The Ministry of Finance has shown its strong determination to collect tax from the 1200 cars. It is going to propose to collect tax from buyers instead of sellers, who have gone away.

As such, the tax payers will be the institutions and individuals who are using the cars imported in the period from 1988 to 2009 by diplomatic subjects. The taxable prices will be defined based on the use value left of the assets. There will be no discrimination in the tax rates on new and old cars.

The time for paying tax is the duration of 90 days since the day the decision of the Prime Minister is released. In order to encourage car buyers to pay tax, the buyers will not be imposed fines for spontaneous transfer, if they come to declare and pay tax during the 90 days.

In order to prevent people from exploiting the preferences applied to diplomatic agencies to evade tax, the Ministry of Finance is drafting a document, proposing the Prime Minister to issue a legal document on the import and use of the cars and motorbikes that serve the operation of diplomatic agencies in Vietnam.

Under the draft document, used cars must follow the Decree No 12, which means that after the cars’ users leave Vietnam, the cars must be re-exported and must not be transferred in Vietnam.

Brand new cars are allowed to be transferred in Vietnam, but the involved parties must follow necessary procedures, pay tax and fees. – SGTT

Tags: Vietnam automotive, Vietnam automotive industry, Vietnam autos market