An investment association recently proposed that the Vietnamese government should put a special fee on imported cars and motorbikes that is up to 10 times higher than the vehicle’s actual value.
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The proposal, submitted to the ministries of Finance, Transport, Commerce, Industry and Trade, the National Committee on Traffic Safety on May 31 by the Vietnam Association of Financial Investors (VAFI), has shocked consumers and policy makers.
VAFI, a group of 63 Vietnamese banks and fund management companies, claimed this would be a “fee for the right to buy a vehicle” and would reduce mounting traffic accidents, congestion, pollution and help control the trade deficit.
Vietnam’s trade deficit widened to USD1.7 billion in May from a USD1.49 billion shortfall in April, according to Thanh Nien.
An imported motorbike could cost USD40,000
Under the proposal, a motorbike that is already three times more expensive than a low-cost one will have a fee worth twice the bike’s value added to it.
For a motorbike that is five times more expensive, VAFI wants buyers to pay a fee four times the vehicle’s price. This is on top of Value Added Tax, registration fees and the price for the vehicle itself.
For luxury imported cars, a fee ranging from three to 10 times the vehicle’s price was proposed, except for cars meant for public transport, like taxis and tourist cars.
This fee is not applicable to low-cost bikes and cars.
VAFI also proposed a ban on licensing new factories to assemble motorbikes and cars.
If the proposal is approved, which experts said is unlikely, an imported SH motorbike could fetch over VND800 million (USD40,000), a sum big enough to buy a decent convertible in the U.S.
An SH is sold for VND160-170 million (USD7,766-USD8,252) in Vietnam now.
According to VietnamNet’s calculations, an imported Porsche 911 Carrera GTS, now sold for VND6 billion (USD291,000), would be priced at VND66 billion (US3.3 million) because buyers would have to pay an additional fee 10 times the car’s value.
In related news, the Ministry of Finance is compiling a draft decision on stipulating the fixed tax sums on used passenger cars. If the Prime Minister approves the draft document, it will be difficult for luxury cars to enter the Vietnamese market.
Under this draft, car models with five or less seats and cylinder capacity over 5.0L would have the new tax rate of USD56,000, an increase of USD26,000, VietnamNet reported.
Meanwhile, the models cylinder capacity of 4.0L to 5.0L would have the new tax of USD42,000, a USD15,600 increase.
Cars with the cylinder capacity of 3.0L to 4.0L would be receive a USD26,000 tax instead of the current USD20,000 one.
New tax rates would also be applied to car models with six to nine seats.