Car importers in a rush before tax hikes

December 30, 2015 | 13:36

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It will come as no surprise that the spending of Vietnamese people on completely built cars imported from foreign manufacturers marked a record level of nearly $3 billion in 2015.

The newest report published by the General Statistics Office estimated the total number of cars imported (CBU cars) into Vietnam throughout 2015 to be 125,000 units with the total value of $2.97 billion.

These figures indicate increases of 76.6 per cent in quantity of CBU and 87.7 per cent in the value in comparison to the year 2014.

For the last month of the year only, the number of cars imported is estimated to be 14,000, at the total value of $382 million.

However, an even higher sales volume is within reach this year, given the current high selling season and people’s awareness of the special consumption tax (SCT) hike applicable from January 1, 2016.

According to the newly effective Decree No.108/2015/ND-CP, giving guidance on the implementation of the amended law on SCT, tax rates will be higher due to changes in the method of calculation.

In case importers sell CBUs via an agency model, the SCT rate is the agent’s selling price before deducting any commissions, potentially largely differring from the previously applicable wholesale price.

In case CBUs are subsequently sold by a trading entity, the SCT rate must not be less than 93 per cent of the average selling price of the trading entity, instead of the 90 per cent as previously regulated.

Along with these changes, SCT rates will include the sums of importers’ profit, marketing, and logistics expenses among others.

Moreover, another draft amendment is waiting the approval of the National Assembly, which targets raising the SCT rate on luxury cars from July 1, 2016. Importers and distributors are now speeding up the progress of year-end orders to avoid the effects of the forthcoming tax hike.

Source: Vietnam’s General Statistics Office