Ministry of Finance proposes to postpone special consumption tax for domestic cars

The Ministry of Finance has just reported to the Government on two options related to the extension.special consumption tax(TTDB) for domestically produced and assembled cars. In which, this Ministry clearly states the advantages and disadvantages for both cases of extending and not extending this type of tax.

Specifically, in the case of extending the payment of special consumption tax on domestically manufactured and assembled cars, the Ministry of Finance said that currently, the country has a total of 12 automobile manufacturing and assembling enterprises. After a period of pandemic outbreak with many difficulties and challenges, with the Government's support policy, the domestic automobile industry has recovered its growth and sales in 2022 exceeded 2019. However, the output and special consumption tax on domestically manufactured and assembled cars are gradually decreasing. In October 2022, the declared output was 25,571 cars with the corresponding special consumption tax of VND 3,884 billion. This number decreased to 9,766 cars and VND 1,442 billion in January 2023.

The Ministry of Finance has proposed to postpone the special consumption tax on domestically produced and assembled cars. (Illustration photo: KT)

“Given the above difficulties and challenges, it is necessary to continue supporting domestic automobile manufacturing and assembly enterprises to recover and develop production and business. Furthermore, after the extension period, automobile manufacturing and assembly enterprises must pay full tax to the state budget,” said the Ministry of Finance.

However, the disadvantage of this option is that it may create concerns and reactions from partners related to the national treatment regulations of the WTO and the FTA Agreement that Vietnam participates in. Therefore, the application period of the Decree extending the deadline for paying special consumption tax on domestically produced and assembled automobiles should not be extended.

The Ministry of Finance proposes a plan to extend the deadline for paying Special Consumption Tax arising from the tax periods of June, July, August and September 2023 for domestically manufactured and assembled cars. The deadline for tax payment after the extension is November 20, 2023 at the latest. The total amount of Special Consumption Tax on domestically manufactured and assembled cars extended for 4 tax periods as proposed is about 10,400 - 11,200 billion VND.

“In case the Government permits, the Ministry of Finance will submit to the Government for permission to develop a Decree extending the deadline for paying special consumption tax on domestically manufactured and assembled automobiles in 2023 according to simplified procedures. The Ministry of Finance respectfully submits to the Prime Minister and Deputy Prime Minister for comments,” the Ministry of Finance reported.

According to the Ministry of Finance, the case of not extending the payment of Special Consumption Tax on domestically produced and assembled cars has the advantage of helping Vietnam ensure compliance with the WTO's national treatment regulations and FTAs ​​that Vietnam participates in, including the Free Trade Agreement between Vietnam and the European Union.

However, this option will cause the domestic automobile production and assembly market to face difficulties and challenges such as increased bank interest rates and predictions of a difficult financial and credit market in 2023./.