Vietnam’s Ministry of Finance has disagreed with proposals made by Ford, Toyota, and the Vietnam Automobile Manufacturers' Association (VAMA) for lower taxes, according to a ministerial draft document sent for the government’s approval.
Ford calls for easier conditions of tax policies
In order to qualify for preferential tax policies, automakers must meet requirements related to components, models, output, exhaustion, and others, within a period of six or 12 months for tax calculation, per the government’s Decree 26/2023 and Decree 125/2017 with relevant amendments.
The VAMA and Hai Duong province, home to a Ford factory in Vietnam, urged the finance ministry to consider Ford’s suggestion to lower the output conditions in preferential tax policies.
In reply, the ministry said the preferential tax policies aim to encourage automakers to enlarge production and investment in Vietnam. Additionally, during the peak of the Covid-19 pandemic in 2021, per the finance ministry’s recommendations, the government issued new decrees to set easier conditions for such preferential policies. These rules continued beyond the pandemic into the latest Decree 26/2023.
The country has already granted various supporting policies, so the finance ministry has called on the government to continue with the current legal framework on preferential tax policies.
Toyota seeks expansion of tax policies
Toyota Vietnam called on the Ministry of Finance to expand the most-favored nation (MFN) tax rate of 0% to more components under group 98.49 of Decree 125/2017.
The finance ministry replied that some suggestions of Toyota, such as products under HS codes 3926.90.99; 7326.90.99; 8708.99.62; and 8708.99.70, did not come with clear details so the ministry could not consider the proposal.
The ministry also rejected Toyota’s suggestions for other products, such as pipes, screws, bolts, frames, and steel or metal accessories as those products can be made in Vietnam. Therefore, encouraging domestic production is more suitable, it affirmed.
According to data of the VAMA and automakers in Vietnam, Hyundai was the best-selling brand in Vietnam in the first 10 months of this year with 48,626 units. Other top players were Toyota with 42,531; Ford with 29,546; Mitsubishi with 24,013; Honda with 17,218; and Suzuki with 11,528.