Saturday , December 4 2021

Signed FTA series, when will “paradise cars” be taxed in Vietnam?



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Intellectual people

In addition to the RCEP, which has not yet committed to reducing taxes on each official item, the two major FTAs, the CPTPP and the EVFTA, are committed to reducing and eliminating the import tax very quickly, from 7 to 13 years.

Specifically, in 2018, Vietnam and 10 other countries, Japan, Australia, Canada, Singapore, Mexico … officially signed the Comprehensive and Progressive Trans-Pacific Cooperation Agreement (CPTPP). ) with open mechanisms for trade, investment, government procurement and the environment …

With the signing of the FTA series, when will cars in self-paradise be taxed in Vietnam?  - first

Imported cars with tax cuts will follow next-generation FTAs ​​like CPTPP and EVFTA to land in Vietnam.

From a trade perspective, in the automotive import sector, Vietnam is committed to reducing import taxes on cars with less than 9 seats, thanks to many of the world’s leading manufacturers such as Japan, Mexico, Australia and Canada. short and long term roadmap.

Specifically, the tax rate on cars imported from CPTPP countries is currently 70% applied as an MME; in the short term, Vietnam will reduce its average taxes by 4-6% a year.

Under Government Decree 57/2019 on preferential import tariffs for the period 2019-2022, the import tax rate for CBU cars with less than 9 seats from Mexico will be reduced to a low of 56% by 2022.

Meanwhile, the remaining four countries, including Japan, Australia, Canada and Singapore, will have faster tax cuts for high-cylinder vehicles with 2,500 cc or more. The tax rate for 52% of vehicles over 3,000cc will be reduced to 46.2% by 2022.

Vehicles with a capacity of 1,500cc to 2,000cc are reduced to a tax rate of 56% like Mexican cars; Vehicles with a capacity of between 2,000 cc and 2,500cc will be reduced by a tax of 50.9% by 2022.

In the long run, Vietnam is committed to reducing tariffs on open car imports from partner countries such as Japan and Canada from 7 a.m. (since the CPTPP was officially signed).

For other partners, the general tax rate will be applied based on the volume of the car, for example, in cars with less than 9 seats with a large cylinder of more than 3,000 cc, Vietnam will abolish the import tax from 10 years onwards. (i.e., 2029) and Year 13 in smaller cylinder models.

Thus, it can be said that from 2026 to 2032 (depending on the partner), the CPTPP tax on the import of cars from Vietnam to some countries will be 0%.

With the signing of the FTA series, when will cars in auto paradise be taxed in Vietnam?  - 2

If the open conditions are normal and the commitments are met properly, Vietnamese consumers will be able to choose the car more easily and at a more affordable price than at present.

According to some experts, the reason why some partners are exempt from taxation in early Vietnam instead of with other member countries is based on negotiations and negotiations between each partner, based on benefits. advantages or disadvantages for each country. This is the point of progress and fairness that new generation ALTs bring to the WTO – rights and interests are the rights of major countries and founding partners.

Currently, Vietnam imports a limited number of cars with less than 9 seats from Japan, mostly concentrated in some luxury cars; Cars imported from Japan are mainly specialized vehicles and passenger cars. Meanwhile, cars with less than 9 seats from Japanese brands such as Honda, Mitsubishi, Toyota and Subaru have returned to Vietnam, mainly imported to Thailand and Indonesia with a 0% tax from 2018. So with the abolition of the tax from the 7th year onwards, Japanese cars (2026) have little impact on the Vietnamese passenger car market.

Due to the Vietnam-EU Free Trade Agreement (EVFTA), Vietnam will sync imported cars from the 28 EU member states by synchronizing and cutting hard from August 2020 until the end of the year. 2030 is fully open.

According to the guidelines of the recent Government Decree 111/2020 / ND-CP, in the period 2020-2022 regarding the exemption from import and export taxes of EVFTA goods, the EU car import tax rate mainly in Germany, France, Italy, Sweden … Vietnamese average 6% , It will fall from 8 to 7.4% per year (by volume).

While the current EU car tax rate is being charged from 67-70.9% to Vietnam, and with a roadmap reduced by 6.8-7.4% per year, cars going to the EU will take 9 to -10 years to eliminate taxes. And from year 3 to year 5, the rate of import tax will fall sharply by tens of percent.

In theory, the price of imported cars, such as Audi, Peugeot, Renault, Lexus, German Volvo, France, Italy, Sweden or Japan, Mexico, Australia and Vietnam, can be felt by consumers during this period. next. However, this is the necessary condition to be able to lower the price of the car, it must be the market, the selling price, the tastes of the customers …

In addition to the new car market, the CPTPP Agreement also includes regulations that allow the import of used cars (use in the exporting country for more than 5 years). Specifically, in 2019, Vietnam is allowed to import 66 cars using the tariff quota auction, of which the Ministry of Industry and Trade has successfully auctioned off 33 vehicles over 3,000 cc and 33 cars with less than 3,000. cc.

Although the CPTPP allows the import of used cars (not used for more than 5 years in the exporting country), only according to the minimum quota of 66 and the average increase of 6 units per year. Therefore, it is likely that old car models are unlikely to catch up with Vietnam, causing environmental risks which does not affect the used car market much.

Nguyen Tuyen

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