- The Vietnamese government has issued a decision to extend the implementation of the tax incentive program for domestically manufactured and assembled cars until the end of December 31, 2027.
- Government to allow enterprises to choose a 6-month or 12-month tax incentive consideration period, instead of only enjoying tax incentives for no more than six months as before.
The Vietnamese government has issued a decision to extend the implementation of the tax incentive program for domestically manufactured and assembled cars until the end of December 31, 2027. The goal is to continue encouraging enterprises to invest, expand production scale, and promote the development of the domestic auto supporting industry.
This is stated in Decree No. 101/2021, amending and supplementing many articles of Decree No. 57/2020 (issued on May 25, 2020) on export tariff, preferential import tariff preferential treatment, list of goods and absolute tax rate, mixed tax, import tax outside the tariff quota. This regulation will take effect from December 30.
In this Decree, the Government stipulates that enterprises have certificates of eligibility to manufacture and assemble automobiles issued by the Ministry of Industry and Trade and satisfy the conditions on components, vehicle models, output, and emissions. In the preferential consideration period, dossiers and procedures are subject to the MFN (Most Favored Nation Treatment) import tax rate of 0% for imported auto parts that cannot be produced domestically.
New points in the revised Decree No. 101/2021
Previously, the tax incentive program for automobile production and assembly was applied from November 16, 2017, and is expected to end on December 31, 2022, according to Decree No. 125/2017 and Decree No. Decree No. 57/2020 of the Government. This is the first program applied in Vietnam, in line with international commitments.
The conditions on output to participate in the Program and regulations on the tax incentive consideration period were also amended and supplemented by the Government to allow enterprises to choose a 6-month or 12-month tax incentive consideration period, instead of only enjoying tax incentives for no more than six months as before.
More specifically, for passenger vehicles with less than nine seats and a cylinder capacity of less than 2,500cc, the Government stipulates the minimum general output for vehicle models to be 11,500 vehicles, respectively for the 6-month tax incentive period and 23,000 vehicles for the 12-month tax incentive review period. The minimum overall output for one model is 4,500 cars for the 6-month incentive period and 9,000 cars for the 12-month incentive period, respectively.
For electric vehicles, fuel cell vehicles, hybrid vehicles, fully biofuel-powered vehicles, and vehicles using natural gas, the Government stipulates a minimum of 125 vehicles for the 6-month tax incentive consideration period and 250 vehicles with a 12-month tax incentive period.
The future for our country’s auto industry
The program’s implementation has made an essential contribution to the strategy’s performance for developing the domestic automobile industry to 2020, with a vision to 2025. Promoting automobile manufacturing and assembling enterprises invest in expanding production, increasing the localization rate, and developing domestic supporting industries.
VinFast Company (belonging to Vingroup) is investing in a complex of automobile manufacturing and assembly factories with a total investment capital of 3.5 billion USD. Truong Hai Automobile Joint Stock Company (Thaco) invested in a new high-end car factory worth 4,000 billion VND and was granted a new investment certificate in 2021. Hyundai Motor Production Joint Stock Company Thanh Cong Vietnam has also invested in a factory in Ninh Binh with a production capacity of 100,000 vehicles per year.
Vietnam excluded from EAEU’s list of GSP preferential tariffs since October 2021