JBA seeks more incentives for auto industry

Shimon Tokuyama, chairman of JBA, said the association petitioned the finance ministry to offer more incentives for auto manufacturers in the revised law on taxes drafted by the ministry. The draft is set to be submitted to the National Assembly for consideration in October.

JBA wants the ministry to back domestic auto production by helping firms invest in equipment and take out bank loans. The organization also asks the ministry to provide financial aid for investments in production of auto parts and add corporate income tax incentives in the draft law.

JBA proposes the ministry remove import tariffs on auto parts which are not manufactured in Vietnam.

Regarding the special consumption tax, the association suggested tax reductions for under-nine-seat autos with engine capacity of 1,000cc to less than 2,000cc.

JBA wants the revised law to take effect from the beginning of July next year.

The association said it heard that the import tariff on completely built-up (CBU) autos manufactured in ASEAN countries would drop from 50% to 40% in January 2016, 30% in January 2017 and 0% in January 2018. However, related regulations have not been issued, so JBA hoped the Government to publicize a road map for tax reductions to assist businesses in working out production plans.

Members of the Japan Business Association in Vietnam are auto manufacturers and assemblers such as Toyota, Honda and Suzuki.

According to the revised law on taxes, auto producers can enjoy a corporate income tax of 10% in the first 15 years.

A tax exemption in the first next four years and a tax cut of 50% in the following nine years will be offered to enterprises having projects to manufacture priority types of autos and meet requirements for investment capital, employees and disbursement as regulated in the laws on special consumption tax and corporate income tax. Tax incentives also apply to projects to turn out important parts of an auto like engines and gearboxes.

The revised law on taxes includes amendments and supplements to corporate income tax, personal income tax, value added tax, special consumption tax, land use tax on non-farming area, environmental protection tax and tax management.