Government still indecisive in raising tax, fee on pick-ups

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According to a source of VIR, on April 28 MoF held a working session with automobile manufacturers that will be affected by the change in the special consumption tax and registration fee applicable for pick-ups, but the meeting was concluded without any specific results.

Earlier, in Document No.133/TB-VPCP dated March 14, 2017, Deputy Prime Minister Trinh Dinh Dung asked MoF to reconsider the tax and the fee for pick-ups in order to fit the actual purpose of these vehicles.

Pick-ups have been very popular recently because the applicable special consumption tax and registration fee are lower than for cars under nine seats with the same engine capacity, and it is also not barred from travelling in cities like trucks are.

The import of pick-ups rose fast in the past seven years. From 2010 to 2016, the number rose from 2,600 to 26,855, a ten-fold increase in volume and an eleven-fold increase in value. Meanwhile, sedans only saw an 1.47-fold increase in volume in the same period.

According to the Vietnam Auto Manufacturers’ Association (VAMA), in 2016, 23,099 pick-ups were sold domestically, accounting for 7.5 per cent of the total car sales. VAMA expects this number to rise to 25,000 in 2017.

Decree No.06/2016/TT-BGTVT effective from November 1, 2016, defines pick-ups with an open cargo area attached to the car that is able to hold a maximum of 1,500 kilogrammes and has fewer than five seats as cars. Accordingly, pick-ups will not be subjected to restrictions in driving lanes and hours like they used to be. Experts said that this new regulation makes pick-ups increasingly popular.

Tran Ba Duong, chairman of Truong Hai Auto Corporation, said that it is not fair that pick-ups in Vietnam are subject to lower special consumption tax and registration fee than individual cars.

If the government applies the special consumption tax of 75 per cent (currently applicable to cars with same cylinder capacity) on pick-ups and raises the registration fee of pick-ups from the current 2 to 10-12 per cent to bring it in line with cars, it would cause the price of pick-ups to rise by 40 per cent.