autokisser
02-13-2008, 07:06 AM
Sources say the Ministries of Finance and Industry and Trade are considering raising the import tax on cars, which also means that the car price will go up.
In fact, car importers are also forecasting that the Government is going to increase the tax on car imports after the Prime Minister asked ministries and branches to reconsider the tax policies on car and motorbike imports.
The Prime Minister has asked the aforementioned Ministries to draw up suitable tax policies in order to reduce traffic jams, which have become more serious in the last few years.
An official from the Ministry of Industry and Trade revealed that some ministries have suggested only slightly raising the import tax, by 3%, while others asked to reinstate the previous tax rate of 70%.
Meanwhile, some car import companies affirmed that the draft tax policy has been completed and will be submitted to the Prime Minister soon. Raising the tax on car imports is considered one of the five most important measures towards the goal of reducing traffic congestion, and it is expected that the new tariff on car imports will be valid within the first quarter of this year.
It remains unclear how high the new tax rates will be and which kinds of vehicles will be subject to tax increases.
Car importers have warned that once the new tax is instituted, prices will go up. Meanwhile, car buyers, who have heard about the possible tax increases, are rushing to buy cars in anticipation of tax and price jumps.
Importers said that the number of car buyers is increasing sharply and many are ready to pay in advance.
Nguyen Thi Vinh, Director of Hai Phong-based Vinh Hoang Company, said that she does not dare to accept payment in advance, because she fears that the decision to increase the tax may be released before the imports arrive and she will suffer losses.
Director of another car import company said that his company cannot meet drastically increasing demand. He has denied the opinion that people rush to buy cars to drive for Tet, saying that clients know they will not get deliveries until after the holiday. The director said that people want to buy cars right now fearing that prices will increase sharply after the tax increase decision is made.
In fact, this month, the prices of several imported models like Toyota Camry and Hyundai Santa Fe have increased by $2-3,000/unit because customs agencies have defined higher taxable value of these imports. For example, a Hyundai Santa Fe 2.2L was before taxed at $13,000/unit, and now is taxed at $16,000/unit.
Car dealers say that if the import tax increases by 3-10%, car prices will likewise increase by $500/unit, at least.
The news about the possible tax increases is welcomed by local automobile manufacturers, because imports will be less competitive.
For example, at the end of 2007, an imported Camry 2.4L was priced at $51,000, the same level with a domestically assembled car of the same model. Since the beginning of the year, the price of the Camry has increased to $53,000 since customs agencies imposed higher taxable value. If the tax rate is raised by 3-10%, the car price will be $55,000/unit, unable to compete with locally made cars.
In 2007, Vietnam cut the car import tax three times, from 90% before Vietnam became a WTO member to 80% in mid January 2007, then to 80% in mid 2007. Two additional tax cuts were implemented within three months, and now the tax rate on brand new car imports is 60%.
The tax cuts, which aimed to force local manufacturers to lower their prices, did not bring the desired effect. Local automobile joint ventures are maintaining expensive prices.
In fact, car importers are also forecasting that the Government is going to increase the tax on car imports after the Prime Minister asked ministries and branches to reconsider the tax policies on car and motorbike imports.
The Prime Minister has asked the aforementioned Ministries to draw up suitable tax policies in order to reduce traffic jams, which have become more serious in the last few years.
An official from the Ministry of Industry and Trade revealed that some ministries have suggested only slightly raising the import tax, by 3%, while others asked to reinstate the previous tax rate of 70%.
Meanwhile, some car import companies affirmed that the draft tax policy has been completed and will be submitted to the Prime Minister soon. Raising the tax on car imports is considered one of the five most important measures towards the goal of reducing traffic congestion, and it is expected that the new tariff on car imports will be valid within the first quarter of this year.
It remains unclear how high the new tax rates will be and which kinds of vehicles will be subject to tax increases.
Car importers have warned that once the new tax is instituted, prices will go up. Meanwhile, car buyers, who have heard about the possible tax increases, are rushing to buy cars in anticipation of tax and price jumps.
Importers said that the number of car buyers is increasing sharply and many are ready to pay in advance.
Nguyen Thi Vinh, Director of Hai Phong-based Vinh Hoang Company, said that she does not dare to accept payment in advance, because she fears that the decision to increase the tax may be released before the imports arrive and she will suffer losses.
Director of another car import company said that his company cannot meet drastically increasing demand. He has denied the opinion that people rush to buy cars to drive for Tet, saying that clients know they will not get deliveries until after the holiday. The director said that people want to buy cars right now fearing that prices will increase sharply after the tax increase decision is made.
In fact, this month, the prices of several imported models like Toyota Camry and Hyundai Santa Fe have increased by $2-3,000/unit because customs agencies have defined higher taxable value of these imports. For example, a Hyundai Santa Fe 2.2L was before taxed at $13,000/unit, and now is taxed at $16,000/unit.
Car dealers say that if the import tax increases by 3-10%, car prices will likewise increase by $500/unit, at least.
The news about the possible tax increases is welcomed by local automobile manufacturers, because imports will be less competitive.
For example, at the end of 2007, an imported Camry 2.4L was priced at $51,000, the same level with a domestically assembled car of the same model. Since the beginning of the year, the price of the Camry has increased to $53,000 since customs agencies imposed higher taxable value. If the tax rate is raised by 3-10%, the car price will be $55,000/unit, unable to compete with locally made cars.
In 2007, Vietnam cut the car import tax three times, from 90% before Vietnam became a WTO member to 80% in mid January 2007, then to 80% in mid 2007. Two additional tax cuts were implemented within three months, and now the tax rate on brand new car imports is 60%.
The tax cuts, which aimed to force local manufacturers to lower their prices, did not bring the desired effect. Local automobile joint ventures are maintaining expensive prices.