Driving a bus through luxury vehicle regulations

Luxurious cars have wormed their way into Vietnam in the past three years, including several in the form of personal assets of overseas Vietnamese (Viet Kieu) who return to reside in home country. Some Viet Kieu are perceived as taking advantage of tax rules allowing them to bring in one personal vehicle.  

Some localities reportedly received close to 100 luxurious cars last year, including top-tier brands, compared to much smaller number of such arrivals in 2011.

During 2011-2012 central Danang city hailed three Bentley Continental Flying Spur and two Roll Royce Ghosts that were made in 2011 and brought into the country by Viet Kieu as their personal assets when returning to live in the home country. The Central Highlands’ province Kon Tum was the landing place of one cutting-edge Rolls Royce Phantom Drophead made in 2010.

Hanoi’s capital was the recipient of a variety of top car brands like Bentley Continental Flying Spur 4D made in 2010, Rolls Royce Phantom made in 2011 or Jaguar made in 2010, just to date a few during the period by the same way.

A source from BMW Euro Auto, which was the authorised maintenance agent to Rolls Royce cars in Vietnam, told VIR that the country was now home to almost 70 Rolls Royce cars, but only one of them was imported into Vietnam through a direct contract with the manufacturer.

Under Vietnam’s current regulations, each Viet Kieu when returning home to live can bring with them one personal car under usage in foreign countries and the car only incurs special consumption tax (from 45-60 per cent dependent on cylinder capacity) and value added tax while enjoying import tax break.

However, in fact up to 90 per cent of cars imported into Vietnam by Viet Kieu for use when returning to live in home country are luxurious car brands like Rolls Royce, Bentley, Lexus, Land Rover, Porsche, BMW or Mercedes Benz.

Most of these cars were almost brand-new as they were made in the year they were imported into Vietnam with low odometer readings.

For instance, a Lexus GX 570 with cylinder capacity 5.7L, made in 2011 with over 1,000km traveled distance, was declared a bit more than $60,000 in the import value.  After incurring special consumption tax and value added tax its cost was around $140,000, whereas at auto show rooms a similar Lexus version touted as ‘brand-new and imported in completely-built unit form’ fetches above $240,000.

Therefore, the sharp hike in the number of luxurious cars imported into Vietnam in recent years by Viet Kieu returning home to live has raised concerns over abuse of current state incentive tax policies, causing losses to the state coffers.