'Domestic' cars continue to drop in price sharply when applying new regulations

With this regulation, domestically assembled cars have the opportunity to reduce costs and compete with imported cars when from 2018, import tax on cars in ASEAN will be 0%.

The Government has just issued Decree 125/2017/ND-CP amending and supplementing a number of articles of Decree 122/2016/ND-CP dated September 1, 2016 of the Government on Export Tariff Schedule, Preferential Import Tariff Schedule, List of goods and absolute tax rates, mixed tax, import tax outside tariff quota.

One of the notable points of the Decree is the amendment of preferential import tax rates for imported auto components under the Tax Incentive Program.

Accordingly, from 2018, import tax on many types of auto parts under the Tax Incentive Program will be reduced to 0%. However, not all auto manufacturing and assembling enterprises are eligible for this program, and many strict conditions are attached.

Specifically, import tax on some imported auto components is reduced to a preferential rate of 0%.

However, not all domestic automobile manufacturing enterprises enjoy this preferential 0% component tax rate.

Domestically assembled cars have the opportunity to reduce costs and compete with imported cars when from 2018 the import tax on cars in ASEAN is 0%.

One of the requirements is that enterprises must ensure the standards of automobile manufacturing and assembling enterprises according to Government regulations on conditions for manufacturing, assembling, importing and providing automobile warranty and maintenance services.

On the other hand, the Decree has also “finalized” the controversial issue from the consultation stage for this Decree. That is, enterprises must still commit to producing and assembling cars that meet emission standards level 4 (from 2018 to 2021) and level 5 (from 2022 onwards) and achieve the prescribed output.

The output of the car model committed to be produced and assembled domestically (referred to as the minimum output for the committed car model) is specified for each specific stage.

This auto part must be of a type that cannot be produced domestically and must ensure a level of discreteness.

In addition, to receive tax incentives for imported components, businesses must submit documents and procedures to implement the Tax Incentive Program for approval by the authorities.

The dossier includes an official letter of registration to participate in the Tax Incentive Program and a Certificate of Enterprise Qualified as an Automobile Manufacturing and Assembly Enterprise or an Investment Certificate or a technical and economic justification of the factory to prove that the factory's production and assembly capacity is consistent with the minimum annual output of the Automobile Components Tax Incentive Program.

Enterprises shall submit their application for participation in the Tax Incentive Program to the customs office where the enterprise has its head office or where it has a manufacturing or assembly plant to register for participation in the Tax Incentive Program immediately after the date of this Decree being signed or at any time each year during the period of the Tax Incentive Program. The time for participation in the Tax Incentive Program shall be calculated from the date of the registration document onwards.

With this regulation, domestically assembled cars have the opportunity to reduce costs and compete with imported cars when from 2018, import tax on cars in ASEAN will be 0%.

According to VNN