Electric cars flooding into Vietnam will be surprisingly affordable.

The Ministry of Finance plans to reduce the import tax rate from 70% to 50% to encourage the import and use of electric cars.

The Ministry of Finance is seeking feedback on a draft decree concerning the Export Tariff Schedule, the Preferential Import Tariff Schedule, the List of Goods and the absolute tax rates, mixed tax rates, and import taxes outside the tariff quota.

Specifically, the Ministry of Finance has proposed reducing the tax on electric vehicles compared to the current tax rate.

Electric passenger cars with fewer than 9 seats currently have an import tax of 70%, in line with WTO commitments.

According to several Free Trade Agreements (FTAs), the preferential tariff rates for electric vehicles are as follows: ATIGA: 0%, ASEAN - South Korea: 0%; ASEAN - China: 50% in 2018, ASEAN - Japan: 4%. Tesla electric vehicles imported from the US are subject to the Most Favored Nation (MFN) tariff rate of 70%.

A significant reduction in import taxes is proposed for electric vehicles.

The Ministry of Finance believes that electric vehicles (which have no internal combustion engine and operate entirely on electricity) are environmentally friendly products. Currently, countries around the world are very interested in encouraging the production and use of these electric vehicles. Therefore, the Ministry of Finance plans to reduce the import tax rate from 70% to 50% to encourage their use.

In 2016, the import value of electric vehicles was $498,000, mainly from Japan, China, and the US, of which only $70,000 was declared at the MFN 70% tariff rate.

Assessing the impact of reducing import taxes on electric vehicles on budget revenue, the Ministry of Finance stated that: Based on the taxable import value in 2016, the revenue from import taxes would decrease by 0.014 million USD/year (equivalent to only about 0.3 billion VND).

According to VNN