Tax issue for used car imports

Under a Ministry of Finance recent proposal, after completing relevant customs procedures second hand completely-built-unit (CBU) cars would incur ad valorem tax and unit tax instead of only ad valorem taxes currently.

The ad valorem tax rate will be based on specific car types like the case with current brand-new cars while the unit tax will range from $5,000-$10,000 each, depending on specific vehicle types.

If the proposal is given the nod, the price of used imported cars will be driven up significantly.

Earlier, in light of Circular 20/2011/TT-BTC, car salons and commercial firms must show up certificates saying that they were authorised dealers of genuine car manufacturers when it came to under nine seater brand-new imported vehicles.

This means in the coming period, provision of imported CBU cars are most likely to come via authorised dealers for brand-new cars and from commercial firms for used cars.

In regards to supercar import, Vietnam is currently home to 40 Rolls Royce, around 200 Bentley and 350 Audi vehicles, according to the director of a commercial firm specialising in CBU car imports.

Besides restricted regulations towards car imports, registration fee hike from 12 per cent to 20 per cent slated from September 1, 2011 will badly affect the local car market.

Marketing director at BMW Euro Auto Nguyen Dang Thao assumed the registration fee may be initially set at 15 per cent but not immediately be tagged at the ceiling 20 per cent. However, this 3 per cent hike means buyers would have to pay $2,400-$3,400 additionally.

Latest figures from the Ministry of Industry and Trade’s Research Institute for Industry Policy and Strategy show that CBU vehicle import volumes sharply rose from 2005-2010, from 4,226 units in 2005 to 27,491 units in 2008, 47,592 units in 2009 and falling to 33,900 units in 2010.

Meanwhile, locally made less than nine-seater vehicles could only meet 65 per cent of the market demand in 2010.