Localities benefit from 50% reduction in registration fees for domestic vehicles
The 50% reduction in registration fees for domestically produced cars in the last 6 months of the year is estimated to reduce budget revenue by up to 9,000 billion VND. However, some localities with car factories will benefit.
Recently, the Ministry of Finance has submitted to the Government a draft Decree reducing 50% of registration fees for domestically manufactured and assembled cars. The Decree is expected to be issued by the Government in the next few days with an application period from July 1 to December 31, 2023.
According to calculations by the Ministry of Finance, a 50% reduction in registration fees for domestically produced cars in the last 6 months of the year is estimated to reduce budget revenue by 8,000-9,000 billion VND.
However, according to statistics from the two previous reductions in registration fees in 2020 and 2022, this policy contributed to stimulating people's demand for car purchases, helping manufacturers and distributors of domestically produced and assembled cars overcome difficult times with total sales increasing by 15-20% compared to the period before and after support.
In addition, the 50% reduction in registration fees for domestically produced and assembled cars is expected to increase the number of cars manufactured, thereby increasing special consumption tax and value added tax for localities in the coming time.
There are 8 localities that benefit from the collection of these two taxes, which are provinces and cities with automobile manufacturing and assembly plants located in the area, including: Vinh Phuc, Hai Duong, Hai Phong, Ninh Binh, Quang Nam, Binh Duong, and Ho Chi Minh City.
Specifically: In Vinh Phuc there are factories of Honda and Toyota Vietnam; Hai Duong has Ford Vietnam; Hai Phong has VinFast, Ninh Binh has the factory of Hyundai Thanh Cong Automobile Joint Venture; Quang Nam has the factory of THACO (producing KIA, Mazda, Peugeot, BMW,...); Binh Duong has the factory of Mitsubishi Motors Vietnam; Ho Chi Minh City has the factory of Mercedes-Benz Vietnam.
Previously, since the beginning of the year, the People's Committees of Quang Nam and Ninh Binh provinces, together with the Vietnam Association of Mechanical Industry (VAMI) and the Vietnam Automobile Manufacturers Association (VAMA), have continuously proposed that the Government have a policy to support a 50% reduction in registration fees for domestically produced and assembled cars.
In early June, Deputy Prime Minister Le Minh Khai requested the Ministry of Finance to urgently draft a Government Decree on the registration fee for domestically produced and assembled cars, reducing it by 50% compared to the current level, effective from July 1.
Special consumption tax rate for cars with less than 9 seats
For vehicles using internal combustion engines, the special consumption tax on cars with 9 seats or less is calculated based on cylinder capacity. Vehicles with engines under 1.5L are subject to a tax rate of 35%; those with engines over 1.5-2.0L are subject to a tax rate of 40%, those with engines over 2.0-2.5L are subject to a tax rate of 50%, those with engines over 2.5-3.0L are subject to a tax rate of 60%, those with engines over 3.0-4.0L are subject to a tax rate of 90%, those with engines over 4.0-5.0L are subject to a tax rate of 110%, those with engines over 5.0-6.0L are subject to a tax rate of 130% and those with engines over 6.0L are subject to a tax rate of 150%.
For electric cars, from March 1, 2022 to February 28, 2027, battery-powered electric cars with less than 9 seats will be reduced from 15% to 3%; from 10-16 seats and pickup trucks will be reduced from 10% to 2%; from 16-24 seats will be reduced from 5% to 1%.
