Smooth driving for car-makers

Foreign-backed auto manufacturers with due tax arrears bills have been given the kiss of life.

On October 4, 2011 the Ministry of Finance (MoF) sent a document to local customs departments showing ways to tackle troubles relative to imported auto components’ tax arrear collections, which have affected Vietnam-based auto joint ventures such as Ford, Honda and Toyota.

Under the MoF instructions, concessionary tax rates will be applied to locally assembled automobiles in light of Ministry of Industry and Trade regulations with component sets imported into Vietnam directly or via authorised import deals.

Besides, imported components must be finished products, yet to be assembled or unfinished products in light of Ministry of Science and Technology (MoST) regulations. The preferred tax rates are much lower than conventional rates currently applied to imported completely-built-unit vehicles (CBUs).

For synchronised breakdown component sets or unsynchronised sets with one or some devices not satisfying breakdown levels, customs bodies will make classifications and impose preferred tax rates on whole component sets.

However, the value of imported components not meeting breakdown levels must not exceed 10 per cent of the total value of components creating a whole vehicle, irrespective of car types.

Particularly, for components imported from April 15, 2006 to December 31, 2010, the total value of components not satisfying breakdown standards must not exceed 10 per cent of the components’ value.

For components imported from January 1, 2011 total value of components not satisfying breakdown standards must not exceed 10 per cent of the total value of components creating a complete car irrespective of car types from that date to the date of the customs check.

The components subject to preferred rates do not cover chassis, body, trunk and cabins for lorries.

Also under MoF proposals, in case imported components do not satisfy these requirements, the customs bodies will make classifications and imposed taxes on whole component sets based on CBU car current tax rates from 72-83 per cent depending on each type.

Earlier, the MoF forwarded Document 10246 to the government reporting that five auto joint ventures importing components had not satisfied breakdown levels by the MoST.

The firms are Vinamotor, Honda Vietnam, Toyota Vietnam, Ford Vietnam and GM Daewoo. However, the report also read these firms’ imported component values not meeting breakdown levels were lower than the10 per cent regulated benchmark.

This means the five auto joint ventures may not have to pay due tax arrears bills. – VIR

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