Taxing issue leaves customs in a spin

Auto firms to pay big sums in tax arrears include Honda Vietnam, Toyota Vietnam, Ford Vietnam, GM Daewoo Vidamco and Vinamotor.

General Department of Customs deputy chief Hoang Viet Cuong said the tax arrears issue was basically settled after the Ministry of Finance (MoF) enacted Document 13113/BTC-CST presenting preferential import tariffs on auto parts of October 3, 2011.

Shortly after the MoF’s guiding decree was in place, customs bodies and relevant firms embraced work to quickly address unsettled problems. However, much work remains to be done.

In light of Document 13113/BTC-CST auto firms’  tax arrears review will be divided into two periods - from April 15, 2006 (the date MoF’s Circular 19/2006/TT-BTC guiding auto components and parts classification came into force) to December 31, 2010 and  2011.

An auto firm representative told VIR customs bodies and firms had just finalised tax calculations for file records in 2011, while huge file records for 2006 to 2010 had yet to be touched.

“Customs bodies require firms to submit entire import declaration records from 2006 to 2010 for making comparisons. There would be a huge pile of relevant files since at some firms such papers number 100,000 copies per year,” said the representative.

Under current MoF regulations to enjoy parts tax rates, total value of imported components not satisfying regulated breakdown level must not exceed 10 per cent of total component value for assembling or manufacturing whole car units of all car types in a specific year.

Auto firms, failing to meet MoF’s regulations, will incur the tax rates equal to those levied on completely-built car units (CBUs) which all exceeded 72 per cent of the car value in 2011.

In respect to the component set breakdown level as a basis for setting tax, the Ministry of Science and Technology just made public Circular 05/2012/TT-BKHCN effective from April 30, 2012 prescribing methods to define cars’ localisation rates to amend Decision 05/2005/QD-BKHCN on breakdown levels of automobile parts. Accordingly, breakdown levels of imported auto parts relevant to body  and frames will be divided into six major groups. Auto frames over 3.7m long are allowed for electrostatic painting before it is imported into Vietnam.