" A fear" of violating the commitment if providing incentives to home-made automotive components

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According to the Ministry of Finance, when commenting on the draft, Deputy Prime Minister Trinh Dinh Dung proposed to report more about SCT calculation price for home-made automotive parts.

The Ministry of Finance stated that the content of SCT calculation price for home-made goods is stipulated in Clause 1, Article 2 of Law No. 106/2016 / QH13 amending and supplementing a number of articles of the Law on Value Added Tax, the Law on SCT and the Law on Tax Administration.

Specifically, Clause 1, Article 6 of the Law on SCT No. 27/2008 / QH12 has been amended and supplemented in Law No. 70/2014 / QH13 as follows: For home-made goods, imported goods, the SCT calculation price is the selling price of manufacturers or importers.

If goods subject to SCT sold to a commercial business establishment which has a relationship with the parent company, subsidiary or subsidiary companies in the same parent company with manufactures or importers, or to a commercial business establishment which has an association relationship, the SCT calculation price must not be lower than the rate of 0% of the average price of commercial business establishments buying directly from manufacturers and importers according to the Government's regulations.

Based on the provisions of this Law, SCT calculation price for home-made goods subject to SCT (including automobiles) are selling price of manufacturers. Therefore, if amending regulations on SCT calculation price for automobiles in the direction of excluding SCT for home-made spare parts and components, the provisions of Clause 1, Article 6 of the Law on SCT must be revised.

However, the Ministry of Finance said that, under the National Treatment Principles, the signing parties acknowledge that taxes, domestic revenues, laws, or regulations and requirements affecting sales, offering, transportation, distribution or use of domestic products are not applicable to home-made or imported products, resulting in the protection of domestic goods.

In addition, the Principles also emphasize that no signing parties will apply or maintain a domestic quantitative rule on mixing, processing or using products in a specific volume or proportion volume, or directly or indirectly requires that a certain amount or proportion of any product governed by that rule must be provided by domestic source. In addition, no signing parties will apply domestic quantitative rules in any way contrary to the principles set out in Clause 1 (Principles-Reporter).

Therefore, "if guiding that the SCT calculation price excludes the value of home-made components, it may violate the commitment on distinguishing between imported goods and home-made goods" - the Ministry of Finance’s document to the Prime Minister stressed this "fear".

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However, the Ministry of Finance said that some countries also apply the rule on deducting the value of imported components or special consumption tax incentives for home-made automobiles for a short time of 3-5 years. The purpose is that in case of being sued, the incentive rules also expire.

Therefore, the Ministry of Finance is further studying to submit to the Government and the National Assembly for consideration and decision when amending the Law on SCT.