Double Tax: Used Cars More Expensive Than New Cars

Import tax on used cars is expected to increase, used cars are twice as expensive as new cars, businesses that import used cars are out of business. With the current tax rate, many businesses are losing money; not to mention having to pay back taxes.

The Ministry of Finance has just revised the import tax on used cars, expected to be added to the preferential import tax schedule.

Accordingly, passenger cars with 9 seats or less, with a cylinder capacity of less than 1,000cc, will have an absolute tax rate of 10,000 USD. Cars with a cylinder capacity of 1,000cc or more will be subject to a mixed tax rate. In which, SUVs, sports cars, passenger cars and common luggage compartments (except Vans) with a cylinder capacity of 1,000cc - under 2,500cc have a mixed tax rate of: used car tax price multiplied by 200% or 150%, plus 10,000 USD (taken at the lowest rate). Other types of cars are: used car tax price, multiplied by the tax rate of new cars of the same type, plus another 10,000 USD.

For vehicles with displacement of 2,500 cc or more, SUVs, sports cars, passenger cars and common luggage compartments (except Vans), the mixed tax rate is also: the taxable price of the used car multiplied by 200% or 150% plus 10,000 USD. For other types of vehicles, the taxable price of the used car, multiplied by the tax rate of the same type of new car, plus 15,000 USD.

For vehicles with 10-15 seats and a cylinder capacity of less than 2,500cc, the tax price for used cars is multiplied by the tax rate for new cars of the same type, plus 10,000 USD. For vehicles with more than 2,500cc, the tax price for used cars is multiplied by the tax rate for new cars of the same type, plus 15,000 USD.

The Ministry of Finance is sending comments to authorities and businesses.

According to businesses, this expected tax rate is considered to be quite high compared to the current rate. In Decree 122/2016, used cars with cylinder capacity under 1,000cc are subject to an absolute tax of 5,000 USD/car, while those with capacity from 1,000-1,500cc are subject to 10,000 USD/car.

Meanwhile, the mixed tax rate for cars carrying 9 people or less with an engine capacity of 1,500 - 2,500cc will be calculated by: the taxable price of a used car, multiplied by the tax rate of a new car of the same type and added 5,000 USD.

Import tax on used cars is expected to increase, used cars are twice as expensive as new cars.

For vehicles with 10-15 seats and a cylinder capacity of less than 2,500cc, the tax price for used cars is multiplied by the tax rate for new cars of the same type, plus 10,000 USD. For vehicles with more than 2,500cc, the tax price for used cars is multiplied by the tax rate for new cars of the same type, plus 15,000 USD.

The Ministry of Finance is sending comments to authorities and businesses.

According to businesses, this expected tax rate is considered to be quite high compared to the current rate. In Decree 122/2016, used cars with cylinder capacity under 1,000cc are subject to an absolute tax of 5,000 USD/car, while those with capacity from 1,000-1,500cc are subject to 10,000 USD/car.

Meanwhile, the mixed tax rate for cars carrying 9 people or less with an engine capacity of 1,500-2,500cc will be calculated by: the taxable price of a used car, multiplied by the tax rate of a new car of the same type and added 5,000 USD.

Vehicles using large-capacity engines are subject to the same import tax rate as new vehicles of the same type, plus an additional 15,000 USD for each vehicle over 2,500cc and 17,000 USD for vehicles over 3,000cc.

According to VNN