MOF may solve tax fraud

MOF may set the tax amount collected on vehicle sales based on Customs Department estimates of value, foiling dealers who cheat by under-reporting their actual sales prices.

MOF is compiling a draft circular to fix the prices of cars and motorbikes, which will set the value added tax (VAT) and corporate income tax (CIT) and personal income tax (PIT) that car dealers must pay.

The move comes following the directions given by Deputy Prime Minister Nguyen Sinh Hung in late 2008 after local media reported the “car and motorbike price chaos.”

Car buyers reveal that car dealers always write down prices lower than the real prices on their invoices. In many cases, the recorded prices are the same as quoted prices, but, in fact, customers have to pay much higher than the manufacturer’s suggested retail prices.

For example, Air Blade and Lead of Honda were sold at prices higher by 3-7 million dong than quoted prices.

In the future, car and motorbike prices will be defined by customs agencies after surveying the market to calculate the tax rates. Tax agencies must consult many sources, including the market price bulletin and reference prices provided by trading establishments. As for locally assembled cars, tax agencies will refer to the manufacturers’ suggested retail prices (MSRP).

A taskforce in charge of market price surveys will be set up to gather representatives from price appraisal centres under local finance departments, local industry and trade departments and local market control sub-departments.

Tax agencies will submit lists of the car market prices of cars and motorbikes, which include VAT, to cities and provinces.

MOF officials believe that, once applied, the measure will collect several trillions of dong in taxes that agencies failed to collect previously due to false declarations of prices.

The Vietnam Automobile Manufacturers’ Association (VAMA) has pointed out that many car importers also declare import prices and sale prices lower than the actual prices in order to evade taxes.

A brand new 2009 GM Daewoo Matiz, 796cc, AT, has the actual price of $11,800-14,900 per car, but the invoice price is listed at only $10,400.

The 2009 Kia Morning, 999cc, has a price tag of $15,500-17,050, while the price on invoices is listed as $9,300-10,230, lower by $6,200-6,820.

Hyundai I30, 1600cc, which costs $29,900-31,500, lists an invoice price of $17,400-18,900, down by $12,500 per car.

Tags: Vietnam automotive industry, Vietnam automotive tax