Japanese cars imported to Vietnam will soon be exempt from import tax.
With the recently signed CPTPP Agreement, it is likely that in 2019, imported cars from Japan to Vietnam will be exempt from import tax, opening up opportunities for Vietnamese people to buy cheaper cars.
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| Cars imported from Japan may be tax-free in the near future. |
Recently, 11 member countries of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) officially signed the joint agreement. The 11 countries participating in the CPTPP Agreement include Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam.
Although the important member, the United States, has withdrawn and left open the possibility of returning until there are “more favorable terms”, the CPTPP is still a very important trade agreement to remove trade barriers between 11 countries in the Asia-Pacific region. The importance of the Agreement is shown by the numbers when it accounts for 13.5% of global GDP with a market of nearly 500 million people, with a total trade turnover exceeding 10,000 billion USD.
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| Many expensive car models may see price reductions thanks to the CPTPP Agreement. |
According to the roadmap, almost all tax lines from countries in the CPTPP bloc will enter Vietnam with a 0% tax rate and vice versa, including cars. Notably, after the countries complete the necessary procedures and need at least 6 member countries to sign and ratify, the agreement will take effect 60 days later. Most likely in late 2018 and early 2019.
Among the countries participating in CPTPP, Japan has emerged as a promising name for those interested in cars. Although its scale is no longer as before when it has to compete with preferential imported cars from ASEAN, the number of cars from Japan to Vietnam still holds a high position. According to statistics from the General Department of Customs, there were 3,284 completely imported cars from Japan brought to Vietnam in 2017. Of which, mainly high-value cars, not assembled by Japanese car brands in the ASEAN region.
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| Lexus could be the brand that benefits the most when the CPTPP Agreement comes into effect. |
Canada also imports cars into Vietnam, but the amount is insignificant and will hardly affect the Vietnamese market even when the CPTPP Agreement comes into effect. Currently, some countries are also considering joining the CPTPP, including South Korea, which is considering the effectiveness of the Agreement before joining this year or not. If South Korea joins the CPTPP, it will give Vietnamese people more opportunities to own cheaper cars. Although not as massive as before, South Korea and Japan still have a large number of imported cars into Vietnam compared to the US or Europe.
Thus, if the origin conditions are met, many cars imported from Japan to Vietnam can enjoy 0% tax incentives similar to cars originating from the ASEAN region. This is good news for fans of luxury Lexus cars or "high-end" cars from more popular brands such as Toyota Land Cruise Prado, Honda Odyssey...
