Preferential tax policies issued for development of small cars

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Preferential tax policies for fuel-efficient, eco-friendly and small cars. Photo: H.P

Regarding the voters’ proposal to amend the regulations on the SCT taxable price for domestically manufactured cars with nine seats or fewer, the Ministry of Finance said the Prime Minister is now assigning the Ministry of Finance and the Ministry of Industry and Trade to study and submit to the Government policies and measures to support and encourage automobile production and assembly, and increase domestic added value, including solutions on SCT. The proposed measures and policies should be based on their impact assessment, experiences of other countries, consistent with international commitments and ensuring feasibility.

Regarding issuing a preferential tax policy for strategic fuel-efficient, eco-friendly and small cars, the Ministry of Finance said that Law No. 106/2016/QH13 amending and supplementing a number of articles of the Law on VAT, the Law on SCT and the Law on Tax Administration, reduces the SCT rate on cars with fewer than nine seats and a cylinder capacity of 2,000 cm3 or less, and increases the SCT rate on cars with a cylinder capacity of over 3,000 cm3.

Specifically, the SCT rate on cars with a cylinder capacity of 1,500 cm3 or less is reduced to 35% (down 10% compared to the provisions of Law No. 70/2014/QH13); 40% on the cars with a cylinder capacity from 1,500 cm3 to 3000 cm3 (down 5%).

The SCT rate on electric passenger cars with nine seats or less reduces to 15% (a reduction of 10%); 10% for cars from 10 to 16 seats (down 5%); 5% for cars from 16 to 24 seats (down 5%).

In addition, increasing the SCT rate on large-cylinder capacity vehicles to encourage the use of fuel-efficient vehicles to protect the environment. Specifically, the SCT rate on passenger cars with nine seats or fewer and a cylinder capacity exceeding 6,000 cm3 is 150%.

The SCT rate on cars running on both gasoline and electricity or bioenergy, where the proportion of gasoline does not exceed 70% of total energy used, is 70% of the rate applied to the same types of cars.

The SCT rate on cars running on bioenergy is 50% of the rate applied to the same types of cars.

The Ministry of Finance affirmed that the SCT rate has been amended and supplemented to give an advantage for the development of fuel-efficient, eco-friendly and small cars.

The Ministry of Finance will continue to record voters’ recommendations to study, assess the impact, gather international experience, and report to competent authorities for consideration to amend the Law on Special Consumption Tax.

The Government Decree 57/2020/ ND-CP dated May 25, 2020 stipulates types of electric, fuel-cell, hybrid, fully biofuel, and natural gas vehicles subject to the import tax incentive program; amends the standards on minimum general output of vehicle groups and the minimum specific output of vehicle models to be consistent with the actual status of automobile manufacturing and assembling industry; amends regulations on vehicle models and procedures for the implementation of the tax incentive program to reduce administrative procedures to encourage the development of the automobile industry, the Ministry of Finance said.

Therefore, the Government issued preferential policies to develop fuel-efficient, eco-friendly and small cars as proposed.