Unable to increase import tax for truck tractors

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Import tax of a truck tractor is equal to the tax of WCO commitments. Photo: Hong Van.

In the middle of March 2016, VAMI in a proposal to the Ministry of Finance, said current import taxes for tractors (CBU) and for trailers are still very low compared to imported components (CKD). Specifically: Import tax of truck tractors (both new and used units) is less than 2.5% - 7.5% compared to the imported components; the import tax of trailers is less than 12.5% ​​- 20% compared to imported components.

This leads to unfair competition between enterprises importing the whole automobile and enterprises importing components to assemble.

In order to avoid loss of revenue for the state budget, and create equal competition among import enterprises, VAMI proposed the Ministry of Finance to consider adjusting import tax.

Specifically: Increase import tax of a new truck tractor to 20%; reduce import tax of components to 0% because the current tax of components for assembling tractors of China and ASEAN is applying the tax rate of 0%.

For imported second-hand tractors, VAMI proposed to increase import tax to 50% and clearly defined the remaining quality to limit second-hand automobiles which caused environmental pollution.

Similarly, the import tax of new trailers was also proposed to increase to 50% import duty because the current tax of components for assembling trailers of China and ASEAN is applying the tax rate of 0%.

Regarding the proposal of tax increases for imported tractors, the Ministry of Finance said MFN import tax which is prescribed for tractors (item code: 8701.90.90) was 5%, consistent with commitments of WTO; tax for trailers (item code: 8716.39.99) was 20%, consistent with WTO commitments. Therefore, the recommendation to increase tax of imported tractors from 5% to 20% and trailers from 20% to 50% would be inconsistent with WTO commitments.

For second-hand tractors, the Finance Ministry proposed to increase import tax from 5% to 30%, the highest tax rate regulated by the National Assembly Committee to limit imported old vehicles, poor quality, causing environmental pollution.

However, after consultation with ministries, relevant associations, the Ministry of Finance decided not to adjust the tax rate of second-hand, used tractors of heading 8701. Accordingly, the tax for used tractors will still be applied under Circular No. 182/2015 / TT-BTC issuing export-import tax preferences under the list of taxable goods.

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The Ministry of Finance also expressed a consensus to reduce tax for tractors components down to 0% to support businesses manufacturing and assembly in Vietnam. On the basis of recommendations of relevant ministries and associations, the Ministry of Finance will consolidate into a draft decree regulating to export tax, preferential import tax which will be issued and take effect on September 1, 2016.