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Vietnam automakers ask gov’t to back pedal on luxury tax rise   2009-05-12 - Tuoi Tre

Vietnam automakers ask gov’t to back pedal on luxury tax rise
The Vietnam Automobile Manufacturers’ Association (VAMA) has asked the government to roll back a recent hike in luxury tax until the end of 2010 or until car sales rebound.


The tax on six- to nine-seat cars has gone up from 30 percent to 45-60 percent with effect from April 1. Cars with five seats and fewer saw smaller rises and, in some cases, even cuts in the tax.

But with the economic slowdown taking a toll on the auto industry, Akito Tachibana, chairman of VAMA and president of Toyota Motor Vietnam, recently sent a petition to the National Assembly Standing Committee, Prime Minister Nguyen Tan Dung, and relevant agencies.

In it he asked for not only postponing the luxury tax increases but also extending a value-added tax cut through 2010 and decreasing registration fees for vehicles with fewer than 10 seats and import tax on parts.

In February, the government halved the value-added tax on cars to 5 percent, with effect until December. It also halved the registration fee to 5-6 percent of the vehicle price on May 1. The lower rates will also be in effect until the end of this year.

Registration of a vehicle with fewer than 10 seats now costs 6 percent of the price in Hanoi and 5 percent elsewhere.

In March, the government lowered import tariffs on auto parts by 2-5 percent.

VAMA also said in the petition that the government should offer incentives for producing a strategic car range to raise the ratio of locally-made content, lower prices to compete with imports and boost sales, and develop support industries.

The association urged the government to choose six-to nine-seat cars, which are suitable for family use, for this strategy.

January-April sales by the 16 carmakers operating in Vietnam fell 38 percent year-on-year to 29,289 units, VAMA said.

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