Proposal to reduce registration fees for electric cars by 50%

The Ministry of Finance has just finalized a draft decree amending and supplementing several articles of Government Decree No. 140/2016/ND-CP on registration fees and is currently seeking public opinion. Accordingly, the Ministry of Finance proposes that the registration fee for battery-powered electric vehicles be 50% of the fee for gasoline-powered cars with the same number of seats. This is equivalent to approximately 5% to 7.5% (compared to the current registration fee for traditional gasoline-powered cars).registration feeThe rate is 10% - 15% (depending on the locality), and the application period is 5 years from the date the draft amended decree is approved and comes into effect.

For vehicles that are bought and sold for the second time or more, the registration fee will be 2%.

The Ministry of Finance asserts that stipulating a registration fee for battery-powered electric vehicles at 50% of the registration fee for gasoline-powered vehicles of the same type for five years from the effective date of the decree will reduce state budget revenue, as tax and registration fee revenue from other types of vehicles will decrease because consumers will switch to using them.electric carsIt runs on replacement batteries for other types of vehicles.

The Ministry of Finance is proposing that the Government offer a 50% discount on registration fees for electric vehicles compared to gasoline-powered vehicles. (Illustration photo: KT)

According to a joint report by the Ministry of Industry and Trade and the Ministry of Finance, Vietnam currently lacks specific incentives for electric vehicles from production to consumption, while countries in the region such as Thailand and Indonesia have offered significant incentives regarding consumer markets and taxes.

Vietnam risks falling behind and being overtaken in terms of policies establishing incentives for electric vehicles if it does not introduce mechanisms to encourage businesses, partners, and supporting suppliers to accelerate investment and build an electric vehicle system in Vietnam.

According to regulations, the excise tax applied from July 2016 to electric cars with 9 seats or fewer is 15% (a 10% reduction compared to before); the tax rate for vehicles with 10-16 seats is 10% and for those with 16-34 seats is 5%.

Regarding registration fees, cars with 9 seats or fewer pay a first-time registration fee of 10-12%, depending on the locality. The fee for subsequent registrations is 2%. Electric cars using batteries do not yet receive registration fee incentives; these incentives are mainly applied to clean energy buses.

Previously,VingroupThe proposal suggests that the Government and relevant ministries and agencies allow a pilot program of tax and fee incentives for electric vehicles, including special consumption tax and registration fees. Immediately afterwards, Deputy Prime Minister Le Minh Khai requested the Ministries of Finance, Industry and Trade, Natural Resources and Environment, and Transport to develop plans, proposals, and assess the impact of tax and fee incentives for electric vehicles.

Leaders from the Ministry of Industry and Trade, the Ministry of Transport, and the Ministry of Natural Resources and Environment all agreed with the proposal to pilot a policy offering preferential excise tax and registration fees for five years. The reason is that this policy would encourage production and support consumers in using environmentally friendly electric vehicles.