Customs sector removing difficulties, accompanying automobile industry

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Deputy Director of General Department of Customs Luu Manh Tuong spoke at the dialogue . Photo: Hong Van

Mr. Luu ManhTuong said the Government has set a target to build and develop the automobile industry to replace the importation and step by step proceed to exports. Despite some positive results, Vietnam’s automobile industry has yet developed as expected.

For tax policies in the field of automobile manufacture and assembly, Decree 122/2016 / ND-CP and Decree 125/2017 / ND-CP provide tax incentives for automobile manufacture and assembly. Of which, the import tax rate of 0% is applied for imported components that cannot be produced domestically.

To further promote the automobile industry, the Government issued Decree 57/2020 / ND-CP dated May 25, 2020 to amend and supplement articles of Decree 122/2016 / ND- CP and Decree 125/2017 / ND-CP on export tariffs, preferential import tariffs, list of goods and its flat tax, compound tax and out-of-quota import tax.

Decree No. 57/2020 / ND-CP provides incentives for raw materials, supplies and components for the production, processing (assembly) of supporting industrial products prioritized for development for the automobilemanufacture and assembly industry for the 2020-2024 period.

Decree 57/2020 / ND-CP effective from July 10, 2020, particularly article 7a effective from 1 January, 2020, not only brings import tax on imported componentsthat cannot be produced domestically to 0%, but also requires extremely low output in the first two preferential periods, paving the way for Vietnam's automobile industry to develop.

"This is a key factor contributing to promoting thesupporting industry in Vietnam to grow and get out of the gloomy situation in many years,” Mr. Tuong said.

The Dialogue: Photo: Hong Van

Motivated by preferential policies specified in Decree 122/2016 / ND-CP, Decree 125/2017 / ND-CP and Decree 57/2020 / ND-CP, many enterprises have more opportunities to invest in manufacture and assembly line projects towards the strong development of the automobile supporting industry in Vietnam.

According to the General Department of Customs, during the implementation of the tax incentive program for automobile manufacture and assembly according to the Article 7a of Decree 125/2017 / ND-CP, 13 enterprises registered to join the program with the refunded import tax (tax incentive period from November 16, 2017 to December 31, 2019) of VND9,557 billion and the refunded tax amount (tax incentive period from January 1, 2020 to the end of June 30, 2020)of VND2,854 billion.

This total refunded tax amount was incurred at the Customs Departments of Hanoi, Hai Phong, Ha Nam Ninh and Quang Nam.

Also according to preliminary statistics from the General Department of Customs, as of October 15, the country imported 73,685 cars of all kinds valued at US$1.6 billion and auto components and accessories valued at US$2.86 billion.

The reduction of tax on raw materials, supplies and components for the production of supporting industrial products prioritized for the development of automotive manufacturing and assembly under Decree 57/2020 / ND-CP in the short term may reduce the revenue from import tax on raw materials, supplies and components, but will contribute to promoting the development of supporting industry enterprises.

Thereby, increasing revenue from other domestic taxes such as corporate income tax and value-added tax (VAT), contributing to creating jobs, ensuring social security, attracting investment in the supporting industry and improving trade balance and contributing to spillover and promote the development of other industries.

"Currently, the Customs sector is still actively implementing the issued policies and removing arising difficulties to accompany the automobile supporting industry to increasingly develop in accordance with the set target," Deputy Director General Luu Manh Tuong said.

Confirming that Decree 57/2020 / ND-CP is one of the powerful solutions to promote Vietnam's automobile industry, the leader of the General Department of Customs also stated that in addition to tax and fee policies, the development of the automobile industry also requires many other synchronous solutions such as: transport infrastructure, credit policies, list of automobile industrial support products, technology level, technical content, technology transfer, copyright cost, quality and environmental protection.

Along with the Government's determination, ministries and agencies have also actively implemented measures to support enterprises. However, in the process of implementing new regulations on tax policies, shortcomings and difficulties cannot be avoidable. Therefore, the General Department of Customs assigned the Customs Newspaper to coordinate with the Vietnam Automobile Manufacturers’ Association (VAMA) to organize the dialogue: “Tax policies and the role of Customs to promote Vietnam's automobile industry”.

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"At this dialogue, I hope that the state management agencies and automobile manufacturers and assemblers, automobile supporting industry enterprises, automobile importers and credit institutions will discuss frankly the implementation of tax policies and customs procedures, and propose solutions` to remove difficulties and problems, so that the tax policies continue to be a lever, contributing to promoting Vietnam's automobile manufacture and assembly activities to develop and compete fairly," said Deputy General Director Luu ManhTuong.