Finance ministry seeks tax delay for auto industry
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The Ministry of Finance wants special consumption tax payable by auto companies to be deferred by up to four months to help them recover from the impact of Covid-19.
The tax for June-September, worth a total of VND20 trillion ($871 million), can be paid on November 20.
If the government approves the ministry proposal, auto manufacturers will get extra time to pay the tax for a third straight year.
The ministry said last year auto manufacturers saw sales plunge due to social distancing restrictions and also struggled with a shortage of semiconductors.
Though the tax delay goes against Vietnam’s international commitments, the ministry said it is needed to help businesses overcome difficulties.
Many countries have done the same to help their manufacturers recover, and Vietnam is unlikely to be sued for it, the ministry added.
Auto sales in Vietnam last year dropped 3 percent from 2020 to 383,444 units, according to data from data from the Vietnam Automobile Manufacturers Association (VAMA), TC Motor and VinFast.
Questions & Answers
Q.What is the total value of the tax deferral being proposed?
What is the total value of the tax deferral being proposed?
The Ministry of Finance proposes deferring special consumption tax payments worth a total of VND20 trillion, which equates to $871 million. This sum covers the tax due for the months of June through September.
Q.Why is the Ministry of Finance proposing this tax delay for auto companies?
Why is the Ministry of Finance proposing this tax delay for auto companies?
The ministry states the delay is needed to help auto manufacturers recover from the impact of Covid-19, including sales plunges due to social distancing and struggles with semiconductor shortages. It aims to help businesses overcome current difficulties.
Q.How did auto sales in Vietnam perform last year?
How did auto sales in Vietnam perform last year?
According to industry data, auto sales in Vietnam last year dropped by 3 percent compared to 2020. A total of 383,444 units were sold by manufacturers like VAMA, TC Motor, and VinFast.
Q.Would this tax delay be a new measure for the auto industry?
Would this tax delay be a new measure for the auto industry?
No, if approved, this would mark the third consecutive year that auto manufacturers receive extra time to pay this specific tax. The ministry has previously granted similar deferrals.
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