Proposal to reduce 50% of registration fee for electric cars

The Ministry of Finance has just completed a draft decree amending and supplementing a number of articles of Decree No. 140/2016/ND-CP of the Government on registration fees and is seeking comments. Accordingly, the Ministry of Finance proposes that the first registration fee for battery-powered electric cars be 50% of the fee for gasoline and diesel cars with the same number of seats. Equivalent to about 5% to 7.5% (traditional gasoline-powered cars are currently subject to the same fee).registration feeis 10% - 15% (depending on the locality), the application period is 5 years from the date the draft amended decree is approved and takes effect.

For the case of a vehicle being bought and sold again from the second time onwards, the registration fee will be 2%.

The Ministry of Finance affirmed that the regulation of the registration fee for battery-powered electric cars being 50% of the registration fee for gasoline and diesel cars of the same type within 5 years from the effective date of the decree will reduce the state budget revenue, because the amount of registration tax and fee collected for other car models will decrease because then consumers will switch to usingelectric carsbattery powered replacement for other vehicles.

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

According to a report by the Ministry of Industry and Trade and the Ministry of Finance, Vietnam currently has no specific incentives for electric vehicles from production to consumption, while countries in the region such as Thailand and Indonesia have many large incentives on consumption markets, taxes, etc.

Vietnam risks being left behind in terms of policies to establish incentives for electric vehicles if it does not introduce mechanisms to encourage businesses, partners and ancillary suppliers to increase investment and build electric vehicle systems in Vietnam.

According to regulations, the special consumption tax applied from July 2016 for electric cars with 9 seats or less is 15% (down 10% compared to before); the tax rate for cars with 10 - 16 seats is 10% and for cars with 16 - 34 seats is 5%.

Regarding registration fees, cars with 9 seats or less pay a first registration fee of 10-12% depending on the locality. The second and subsequent fees are 2%. Electric cars using batteries do not have registration fee incentives yet, and registration fee incentives are mainly applied to buses using clean energy.

Previously,VingroupProposing the Government and ministries and branches to allow piloting preferential tax and fee policies for electric cars, including Special Consumption Tax and registration fees for electric cars. Immediately after that, Deputy Prime Minister Le Minh Khai requested the Ministry of Finance, Industry and Trade, Ministry of Natural Resources and Environment, and Ministry of Transport to develop plans, propose and assess the impact of tax and fee incentives for electric cars.

Leaders of 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 preferential policy on special consumption tax and registration fees for 5 years. The reason is that this policy will encourage production and support consumers to use environmentally friendly electric cars./.